Indicate by check mark of the registrant is a well-known seasoned issuer, as defined in Rule
405 of the Securities Act. Yes þ No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section
13 or Section 15(d) of the Act. Yes o No þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation
S-K (Section 229.405 of this chapter) is not contained herein, and will not be contained, to the
best of registrants knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated
filer in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ Accelerated filer o Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes o No þ

On July 27, 2007, the following numbers of shares of the Companys common stock were outstanding:

Common Stock

99,433,450

Class A Common Stock

84,569,833

Class B Common Stock

94,255

The aggregate market value of the voting and non-voting shares (based on the closing price of
these shares on the NASDAQ Global Select Market on December 31, 2006) held by non-affiliates was
approximately $4.0 billion.

We make available through our Web site at www.molex.com our annual report on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports as
soon as reasonably practicable after such material is electronically filed with the Securities and
Exchange Commission (SEC).

Information relating to corporate governance at Molex, including our Code of Business Conduct
and Ethics, information concerning executive officers, directors and Board committees (including
committee charters), and transactions in Molex securities by directors and officers, is available
on or through our Web site at www.molex.com under the Investors caption.

We are not including the information on our Web site as a part of, or incorporating it by
reference into, this annual report on Form 10-K.

Molex Incorporated (together with its subsidiaries, except where the context otherwise
requires, we, us and our) was incorporated in the state of Delaware in 1972 and originated
from an enterprise established in 1938.

We are the worlds second-largest manufacturer of electronic connectors in terms of revenue.
Net revenue was $3.3 billion for fiscal 2007. We operated 59 manufacturing plants, located in 19
countries on four continents, and employed 33,200 people worldwide as of June 30, 2007.

Our core business is the manufacture and sale of electronic components. Our products are used
by a large number of leading original equipment manufacturers (OEMs) throughout the world. We
design, manufacture and sell more than 100,000 products, including terminals, connectors, planar
cables, cable assemblies, interconnection systems, backplanes, integrated products and mechanical
and electronic switches. We also provide manufacturing services to integrate specific components
into a customers product.

The Connector Industry

The global connector industry is highly competitive and fragmented and is estimated to
represent approximately $43 billion in revenue for fiscal 2007. The industry has grown at a
compounded annual rate of 6.1% over the past 25 years and is expected to grow at a rate of 7.9% in
calendar year 2007. We believe that our market share was approximately 8% of the worldwide market
for electronic connectors in fiscal 2007.

The connector industry is characterized by rapid advances in technology and new product
development. These advances have been substantially driven by the increased functionality of
applications in which our products are used. Although many of the products in the connector market
are mature products, some with 25-30 year life spans, there is also a constant demand for new
product solutions.

Industry trends that we deem particularly relevant include:



Globalization. Synergistic opportunities exist for the industry to design,
manufacture and sell electronic products in different countries around the world in an
efficient and seamless process. For example, electronic products may be designed in
Japan, manufactured in China, and sold in the United States.



Convergence of markets. Traditionally separate markets such as consumer
electronics, data products and telecommunications are converging, resulting in single
devices offering broad-based functionality.

For mobile phones, we provide micro-miniature connectors, SIM card sockets, keypads,
electromechanical subassemblies and internal antennas and subsystems. An area of particular
innovation is high-speed backplanes and cables for infrastructure equipment. For example, our
Plateau HS DockTM incorporates a new plated plastic technology to increase bandwidth,
reduce crosstalk and control impedance in applications such as telecommunication routers.

We manufacture power, optical and signal connectors and cables for fast end-to-end data
transfer, linking disk drives, controllers, servers, switches and storage enclosures. Our ongoing
involvement in industry committees contributes to the development of new standards for the
connectors and cables that transport data. For example, our family of small form-factor pluggable
products offers end-users both fiber optic and copper connectivity and more efficient storage area
network management.

We hold a strong position with connectors used in servers, the segment of this market that
accounts for the largest volume of connector purchases. We offer a large variety of products for
power distribution, signal integrity, processor and memory applications. We are also a leading
designer in the industry for storage devices.

Our interconnects are used in air bag, seatbelt and tire pressure monitoring systems and
powertrain, window and temperature controls. Todays cars are mobile communication centers,
complete with navigation tools and multimedia entertainment. Our Media Oriented System Transport
(MOST)connector system uses plastic optical fiber to transmit audio, video and data at
high speeds in devices such as CD and DVD players.

We design and manufacture many of the worlds smallest connectors for home and portable audio,
digital still and video cameras, DVD players and recorders, as well as devices that combine
multiple functions. Our super micro miniature products support customer needs for increased power,
speed and functionality but with decreased weight and space requirements. We believe that they
provide industry leadership with advanced interconnection products that help enhance the
performance of video and still cameras, DVD players, portable music players, PDAs and hybrid
devices that combine multiple capabilities into a single unit.

We are a leading connector source and preferred supplier to some of the worlds largest
computer game makers and have been awarded contracts that demonstrate our skill in designing
innovative connectors. In addition, we provide products for video poker and slot machines.
Pachinko machines, which are popular in Japan, use our compact 2.00mm pitch MicroClaspTM
connector, which features an inner lock that helps on-site installers easily insert new game
boards.

Our high-performance cables, backplanes, power connectors and integrated products are found in
products ranging from electronic weighing stations to industrial microscopes and vision systems.
Advances in semiconductor technology require comparable advances in equipment to verify quality,
function and performance. For this reason, we developed our Very High-Density Metric (VHDM)
connector system to help assure signal integrity and overall reliability in high-speed applications
such as chip testers.

We
increased our presence in the electrical and factory automation market in fiscal 2007 with the acquisition
of Woodhead Industries. As a result, we have extended our industrial product line to include
industrial networks and connectivity as well as industrial communications, both electronics and
software. In addition, we are expanding our line of compact robotic connectors and I/O connectors
for servo motors, as well as identifying factory uses for the time-tested products we have
developed for other industries.

Other. Medical electronics is a growing market for our connectors, switch and assembly
products. We provide both connectors and custom integrated systems for diagnostic and therapeutic
equipment used in hospitals including x-ray, magnetic resonance imaging (MRI) and dialysis
machines. Military electronics is also one of our emerging markets. We have found a range of
electronic applications for our products in the commercial-off-the-shelf (COTS) segment of this
market. Products originally developed for the computer, telecommunications and automotive markets
can be used in an increasing number of military applications.

One of our primary business objectives is to develop or improve our leadership position in
each of our core connector markets by increasing our overall position as a preferred supplier and
improve our competitiveness on a global scale.

We believe that our success in achieving industry-leading revenue growth throughout our
history is the result of the following key strengths:



Broad and deep technological knowledge of microelectronic devices and techniques,
power sources, coatings and materials;

High product quality standards, backed with stringent systems designed to ensure
consistent performance, that meet or surpass customers expectations;



Strong technical collaboration with customers;



Extensive experience with the product development process;



Broad geographical presence in developed and developing markets;



Continuous effort to develop an efficient, low-cost manufacturing footprint; and



A broad range of products both for specific applications and for general consumption.

We intend to serve our customers and achieve our objectives by continuing to do the following:



Concentrate on core markets. We focus on markets where we have the expertise,
qualifications and leadership position to sustain a competitive advantage. We have
been an established supplier of interconnect solutions for more than 60 years. We are
a principal supplier of connector components to the telecommunications, computer,
consumer, automotive and industrial electronics markets.



Grow through the development and release of new products. We invest strategically
in the tools and resources to develop and market new products and to expand
existing product lines. New products are essential to enable our customers to advance
their solutions and their market leadership positions. In fiscal 2007, we generated
approximately 27% of our revenue from new products, which are defined as those products
released in the last 36 months.



Optimize manufacturing. We analyze the design and manufacturing patterns of our
customers along with our own supply chain economics to help ensure that our
manufacturing operations are of sufficient scale and are located strategically to
minimize production costs and maximize customer service.



Leverage financial strength. We use our expected cash flow from operations to
invest aggressively in new product development, to pursue synergistic acquisitions, to
align manufacturing capacity with customer requirements and to pursue productivity
improvements. We invested approximately 14% of net revenue in capital
expenditures and research and development activities in fiscal 2007.

On July 1, 2007 we implemented a new global organizational structure that consists of five
product-focused divisions and one worldwide sales and marketing organization. When fully
operational, we expect the new structure to enable us to work more effectively as a global team to
meet customer needs as well as to better leverage our design expertise and our low-cost production
centers around the world. The new worldwide sales and marketing organization structure will enhance
our ability to sell any product, to any customer, anywhere in the world.

We compete with many companies in each of our product categories. These competitors include
Amphenol Corporation, Framatome Connectors International, Hirose Electronic Co., Ltd, Hon Hai
Precision Industry Co., Ltd., Japan Aviation Electronics Industry, Ltd., Japan Solderless Terminal
Ltd. and Tyco Electronics Ltd. as well as a significant number of smaller competitors. The
identity and significance of competitors may change over time. We believe that the 10 largest
connector suppliers, as measured by revenue, represent approximately 54% of the worldwide market in
terms of revenue. Many of these companies offer products in some, but not all, of the markets and
regions we serve.

Our products compete to varying degrees on the basis of quality, price, availability,
performance and brand recognition. We also compete on the basis of customer service. Our ability
to compete also depends on continually providing innovative new product solutions and worldwide
support for our customers.

Customers, Demand Creation and Sales Channels

We sell products directly to OEMs, contract manufacturers and distributors. Our customers
include global companies such as Arrow, Cisco, Dell, Ford, General Motors, Hewlett Packard, IBM,
Matsushita, Motorola and Nokia. No customer accounted for more than 10 % of net revenues
in fiscal 2007, 2006 or 2005.

Many of our customers operate in more than one geographic region of the world and we have
developed a global footprint to service these customers. We are engaged in significant operations
in foreign countries. Our net revenue originating outside the U.S. based on shipping point to the
customer was approximately 73% in fiscal 2007, 73% in fiscal 2006 and 74% in fiscal 2005.

In fiscal 2007, the share of net revenue from the different regions was approximately as
follows:



51% of net revenue originated in Asia, with 35% from the Asia Pacific South region
(China, Hong Kong, Indonesia, India, Malaysia, Philippines, Singapore, Taiwan and
Korea) and 16% from the Asia Pacific North region (Japan and Thailand). Approximately
22% and 15% of net revenue in fiscal 2007 was derived from
operations in China and Japan, respectively.



29% of net revenue originated in the Americas (United States, Canada, Mexico and
South America).



20% of net revenue originated in Europe.

Revenues from customers are generally attributed to countries based upon the location of our
sales office. Most of our sales in international markets are made by foreign sales subsidiaries.
In countries with low sales volumes, sales are made through various representatives and
distributors.

We sell our products primarily through our own sales organization with a presence in most
major connector markets worldwide. To complement our own sales force, we work with a network of
distributors to serve a broader customer base and provide a wide variety of supply chain tools and
capabilities. Sales through distributors represented approximately 26% of our net
revenue in fiscal 2007.

We seek to provide customers one-to-one service tailored to their business. Our engineers
work collaboratively with customers, often via an innovative online design system, to develop
products for specific applications. We provide customers the benefit of state-of-the-art
technology for engineering, design and prototyping, supported from 27 development centers in 15
countries. In addition, most customers have a single Molex customer service contact and a specific
field salesperson to provide technical product and application expertise.

Our sales force around the world has access to our customer relationship management database,
which integrates with our global information system to provide 24/7 visibility on orders, pricing,
contracts, shipping, inventory and customer programs. We offer a self-service environment for our
customers through

Information regarding our operations by geographical region appears in Note 17 of the Notes to
Consolidated Financial Statements. A discussion of market risk associated with changes in foreign
currency exchange rates can be found in Managements Discussion and Analysis of Financial Condition
and Results of Operations.

Research and Development

We remain committed to investing in world-class technology development, particularly in the
design and manufacture of connectors and interconnect systems. Our research and development
activities are directed toward developing technology innovations, primarily high speed signal
integrity, miniaturization, higher power delivery, optical signal delivery and sealed harsh
environment connectors that we believe will deliver the next generation of products. We continue
to invest in new manufacturing processes, as well as improve existing products and reduce costs.
We believe that we are well positioned in the technology industry to help drive innovation and
promote industry standards that will yield innovative and improved products for customers.

We incurred total research and development costs of $159 million in fiscal 2007, $141 million
in fiscal 2006 and $134 million in fiscal 2005. We believe this investment, approximating 5% of
net revenue, is among the highest level relative to the largest participants in the industry and
helps us achieve a competitive advantage.

We strive to provide customers with the most advanced interconnection products through
intellectual property development and participation in industry standards committees. Our
engineers are active in approximately 70 such committees, helping give us a voice in shaping the
technologies of the future. In fiscal 2007, we commercialized approximately 309 new
products and received 683 patents.

We perform a majority of our design and development of connector products in the U.S. and
Japan, but have additional product development capabilities in various locations, including China,
Germany, India, Ireland, Korea and Singapore.

Manufacturing

Our core manufacturing expertise includes molding, stamping, plating and assembly operations.
We utilize state of the art plastic injection molding machines and metal stamping and forming
presses. We have created new processes to meet the ongoing challenge of manufacturing smaller and
smaller connectors. We have also developed proprietary plated plastic technology, which provides
excellent shielding performance while eliminating secondary manufacturing processes in applications
such as mobile phone antennas.

We continually look for ways to reduce our manufacturing costs as we increase capacity,
resulting in a trend of fewer but larger factories. We achieved economies of scale and higher
capacity utilization while continuing to assure on-time delivery.

We incurred total capital expenditures of $296.9 million in 2007, $276.8
million in 2006 and $230.9 million in 2005, which was primarily related to increasing
manufacturing capacity.

The principal raw materials that we purchase for the manufacture of our products include
plastic resins for molding, metal alloys (primarily copper based) for stamping and gold and
palladium salts for use in the plating process. We also purchase molded and stamped components and
connector assemblies. Most materials and components used in our products are available from
several sources. To achieve economies of scale, we concentrate purchases from a limited number of
suppliers, and therefore in the short term may be dependent upon certain suppliers to meet
performance and quality specifications and delivery schedules. We anticipate that our raw material
expenditures as a percentage of sales may increase due to growth in our integrated products
business and increases in certain commodity costs.

Backlog and Seasonality

The backlog of unfilled orders at June 30, 2007 was approximately $332.5 million compared with
backlog of $370.0 million at June 30, 2006. Substantially all of these orders are scheduled for
delivery within 12 months. The majority of orders are shipped within 30 days of acceptance.

We do not believe that aggregate worldwide sales reflect any significant degree of
seasonality.

Employees

As of June 30, 2007, we employed approximately 33,200 people worldwide. We believe
we have been successful in attracting and retaining qualified personnel in highly competitive labor
markets due to our competitive compensation and benefits as well as our rewarding work environment.
We consider our relations with our employees to be strong.

We are committed to employee development and place a high priority on developing Molex leaders
of the future through training at all levels. This includes on-the-job and online learning, as
well as custom initiatives such as our two-year, in-house global management training program.

Acquisitions and Investments

Our strategy to provide a broad range of connectors requires a wide variety of technologies,
products and capabilities. The rapid pace of technological development in the connector industry
and the specialized expertise required in different markets make it difficult for a single company
to organically develop all of the required products. Though a significant majority of our growth
has come from internally developed products we will seek to make future acquisitions or investments
where we believe we can stimulate the development of, or acquire, new technologies and products to
further our strategic objectives and strengthen our existing businesses.

On August 9, 2006, we completed the acquisition of Woodhead Industries, Inc. (Woodhead) in an
all cash transaction valued at approximately $238.1 million, including the assumption of debt and
net of cash acquired. Woodhead develops, manufactures and markets network and electrical
infrastructure components engineered for performance in harsh, demanding and hazardous industrial
environments. The acquisition is a significant step in our strategy to expand our products and
capabilities in the global industrial market.

Intellectual Property

Intellectual property rights that apply to our various products and services include patents,
trade secrets and trademarks. We maintain an active program to protect our investment in
technology by attempting to ensure intellectual property rights protection for our products.

As of June 30, 2007, Molex owned 909 United States patents and 3,849 foreign patents in
various countries throughout the world. In addition, Molex had 286 patent applications on file
with the U.S. Patent Office (includes both U.S. national filings and Patent Cooperation Treaty
filings) and 1,388 foreign patent applications pending in various patent offices
throughout the world. No assurance can be given that any

patents will be issued on pending or future applications. As we develop products for new
markets and uses, we normally seek available patent protection.

We also protect certain details about our processes, products and strategies as trade secrets,
keeping confidential the information that provides us with a competitive advantage. We have
ongoing programs designed to maintain the confidentiality of such information.

We believe that our intellectual property is important but do not consider ourselves
materially dependent upon any single patent or group of related patents.

Environmental Matters

We are committed to achieving high standards of environmental quality and product safety, and
strive to provide a safe and healthy workplace for our employees, contractors and the communities
in which we do business. We have regional environmental, health and safety (EHS) policies and
strict disciplines that are applied to our operations. We closely monitor the environmental laws
and regulations in the countries in which we operate and believe we are in compliance in all
material respects with federal, state and local regulations pertaining to environmental protection.

Many of our worldwide manufacturing sites are certified to the International Organization for
Standardization (ISO) 14001 environmental management system standard, which requires that a broad
range of environmental processes and policies be in place to minimize environmental impact,
maintain compliance with environmental regulations and communicate effectively with interested
stakeholders. Our ISO 14001 environmental auditing program includes not only compliance
components, but also modules on business risk, environmental excellence and management systems. We
have internal processes that focus on minimizing and properly managing hazardous materials used in
our facilities and products. We monitor regulatory and resource trends and set company-wide short
and long-term performance targets for key resources and emissions.

The manufacture, assembly and testing of our products are subject to a broad array of laws and
regulations, including restrictions on the use of hazardous materials. We believe that our efforts
to reduce the use of hazardous substances have positioned us well to meet environmental
restrictions on product content throughout the world, such as the Restriction on Hazardous
Substances (RoHS) directive in the European Union. The RoHS directive eliminates most uses of
lead, cadmium, hexavalent-chromium, mercury and certain flame-retardants in electronics placed on
the market after July 1, 2006.

John H. Krehbiel, Jr. and Frederick A. Krehbiel (the Krehbiel Family) are brothers. The
members of the Krehbiel Family may be considered to be control persons of the Registrant.
The other executive officers listed above have no relationship, family or otherwise, to the
Krehbiel Family, the Registrant or each other.

We have adopted a Code of Business Conduct and Ethics applicable to all employees, officers
and directors. The Code of Business Conduct incorporates our policies and guidelines designed to
deter wrongdoing and to promote honest and ethical conduct and compliance with applicable laws and
regulations. We have also adopted a Code of Ethics for Senior Financial Management applicable to
our chief executive officer, chief financial officer, chief accounting officer and other senior
financial managers. The Code of Ethics sets out our expectations that financial management produce
full, fair, accurate, timely and understandable disclosure in our filings with the SEC and other
public communications. Molex intends to post any amendments to or waivers from the Codes on its
Web site.

The full text of these Codes is published on the investor relations page of our Web site at
www.molex.com.

This Annual Report on Form 10-K and other documents we file with the Commission contain
forward-looking statements that are based on current expectations, estimates, forecasts and
projections about our future performance, our business, our beliefs, and our managements
assumptions. In addition, we, or others on our behalf, may make forward-looking statements in
press releases or written statements, or in our communications and discussions with investors and
analysts in the normal course of business through meetings, web casts, phone calls, and conference
calls. Words such as expect, anticipate, outlook, forecast, could, project, intend,
plan, continue, believe, seek, estimate, should, may, assume, variations of such
words and similar expressions are intended to identify such forward-looking statements. These
statements are not guarantees of future performance and involve certain risks, uncertainties, and
assumptions that are difficult to predict. We describe our respective risks, uncertainties, and
assumptions that could affect the outcome or results of operations below.

We have based our forward looking statements on our managements beliefs and assumptions based
on information available to our management at the time the statements are made. We caution you that
actual outcomes and results may differ materially from what is expressed, implied, or forecast by
our forward looking statements. Reference is made in particular to forward looking statements
regarding growth strategies, industry trends, financial results, cost reduction initiatives,
acquisition synergies, manufacturing strategies, product development and sales, regulatory
approvals, and competitive strengths. Except as required under the federal securities laws, we do
not have any intention or obligation to update publicly any forward-looking statements after the
filing of this report, whether as a result of new information, future events, changes in
assumptions, or otherwise.

Risk Factors

You should carefully consider the risks described below. Such risks are not the only ones
facing our company. Additional risks and uncertainties not presently known to us or that we
currently believe to be immaterial may also impair our business operations. If any of the
following risks occur, our business, financial condition or operating results could be materially
adversely affected.

We are dependent on the success of our customers.

We are dependent on the continued growth, viability and financial stability of our customers.
Our customers generally are original equipment manufacturers in the telecommunications, data
product, automotive, consumer, and industrial industries. These industries are, to a varying
extent, subject to rapid technological change, vigorous competition and short product life cycles.
When our customers are adversely affected by these factors, we may be similarly affected.

We face rising costs of commodity materials.

The cost and availability of certain commodity materials used to manufacture our products,
such as plastic resins, copper-based metal alloys, gold and palladium salts, molded and stamped
components and connector assemblies, it is critical to our success. Volatility in the prices and
shortages of such materials may result in increased costs and lower operating margins if we are
unable to pass such increased costs through to our customers. From time to time, we use financial
instruments to hedge the volatility of commodity material costs. The success of our hedging
program depends on accurate forecast of transaction activity in the various commodity materials.
To the extent that these forecasts are over or understated during periods of volatility, we could
experience unanticipated commodity materials or hedge gains or losses.

Our markets are highly competitive and we expect that both direct and indirect competition
will increase in the future. Our overall competitive position depends on a number of factors
including the price, quality and performance of our products, the level of customer service, the
development of new technology and our ability to participate in emerging markets. Within each of
our markets, we encounter direct competition from other electronic components manufacturers and
suppliers and competition may intensify from various U.S. and non-U.S. competitors and new market
entrants, some of which may be our current customers. The competition in the future may, in some
cases, result in price reductions, reduced margins or loss of market share, any of which could
materially and adversely affect our business, operating results and financial condition. In
addition, market factors could cause a decline in spending for the technology products manufactured
by our customers.

We are dependent on new products.

We expect that a significant portion of our future revenue will continue to be derived from
sales of newly introduced products. Rapidly changing technology, evolving industry standards and
changes in customer needs characterize the market for our products. If we fail to modify or
improve our products in response to changes in technology, industry standards or customer needs,
our products could rapidly become less competitive or obsolete. We must continue to make
investments in research and development in order to continue to develop new products, enhance
existing products and achieve market acceptance for such products. However, there can be no
assurance that development stage products will be successfully completed or, if developed, will
achieve significant customer acceptance.

We may need to license new technologies to respond to technological change and these licenses
may not be available to us on terms that we can accept or may materially change the gross profits
that we are able to obtain on our products. We may not succeed in adapting our products to new
technologies as they emerge. Development and manufacturing schedules for technology products are
difficult to predict, and there can be no assurance that we will achieve timely initial customer
shipments of new products. The timely availability of these products in volume and their
acceptance by customers are important to our future success.

We face manufacturing challenges.

The volume and timing of sales to our customers may vary due to: variation in demand for our
customers products; our customers attempts to manage their inventory; design changes; changes in
our customers manufacturing strategy; and acquisitions of or consolidations among customers. Due
in part to these factors, many of our customers do not commit to long-term production schedules.
Our inability to forecast the level of customer order with certainty makes it difficult to schedule
production and maximize utilization of manufacturing capacity.

Our industry must provide increasingly rapid product turnaround for its customers. We
generally do not obtain firm, long-term purchase commitments from our customers and we continue to
experience reduced lead-times in customer orders. Customers may cancel their orders, change
production quantities or delay production for a number of reasons and such actions could negatively
impact our operating results. In addition, we make significant operating decisions based on our
estimate of customer requirements. The short-term nature of our customers commitments and the
possibility of rapid changes in demand for their products reduce our ability to accurately estimate
the future requirements of those customers.

On occasion, customers may require rapid increases in production, which can stress our
resources and reduce operating margins. In addition, because many of our costs and operating
expenses are relatively fixed, a reduction in customer demand can harm our gross profit and
operating results.

In the current economic climate, consolidation in industries that utilize electronics
components may further increase as companies combine to achieve further economics of scale and
other synergies. Consolidation in industries that utilize electronics components could result in
an increase in excess manufacturing capacity as companies seek to divest manufacturing operations
or eliminate duplicative product lines. Excess manufacturing capacity has increased, and may
continue to increase, pricing and competitive pressures for our industry as a whole and for us in
particular. Consolidation could also result in an increasing number of very large companies
offering products in multiple industries. The significant purchasing power and market power of
these large companies could increase pricing and competitive pressures for us.

We depend on industries exposed to rapid technological change.

Our customers compete in markets that are characterized by rapidly changing technology,
evolving industry standards and continuous improvements in products and services. These conditions
frequently result in short product life cycles. Our success will depend largely on the success
achieved by our customers in developing and marketing their products. If technologies or standards
supported by our customers products become obsolete or fail to gain widespread commercial
acceptance, our business could be materially adversely affected. In addition, if we are unable to
offer technologically advanced, cost effective, quick response manufacturing services to customers,
demand for our products may also decline.

We face the possibility that our gross margins may decline.

In response to changes in product mix, competitive pricing pressures, increased sales
discounts, introductions of new competitive products, product enhancements by our competitors,
increases in manufacturing or labor costs or other operating expenses, we may experience declines
in prices, gross margins and profitability. To maintain our gross margins we must maintain or
increase current shipment volumes, develop and introduce new products and product enhancements and
reduce the costs to produce our products. If we are unable to accomplish this, our revenue, gross
profit and operating results may be below our expectations and those of investors and analysts.

We face risks associated with inventory.

The value of our inventory may decline as a result of surplus inventory, price reductions or
technological obsolescence. We must identify the right product mix and maintain sufficient
inventory on hand to meet customer orders. Failure to do so could adversely affect our revenue and
operating results. However, if circumstances change (for example, an unexpected shift in market
demand, pricing or customer defaults) there could be a material impact on the net realizable value
of our inventory. We maintain an inventory valuation reserve account against diminution in the
value or salability of our inventory. However, there is no guaranty that these arrangements will
be sufficient to avoid write-offs in excess of our reserves in all circumstances.

We may encounter problems associated with our global operations.

Currently, more than 70% of our revenues come from international sales. In addition, a
significant portion of our operations consists of manufacturing and sales activities outside of the
U.S. Our ability to sell our products and conduct our operations globally is subject to a number
of risks. Local economic, political and labor conditions in each country could adversely affect
demand for our products and services or disrupt our operations in these markets. We may also
experience reduced intellectual property protection or longer and more challenging collection
cycles as a result of different customary business practices in certain countries where we do
business. Additionally, we face the following risks:



International business conditions including the relationships between the U.S.,
Chinese and other governments;

Unexpected changes in laws, regulations, trade, monetary or fiscal policy,
including interest rates, foreign currency exchange rates and changes in the rate
of inflation in the U.S., China or other foreign countries;



Tariffs, quotas and other import or export restrictions and other trade barriers;



Difficulties in staffing and management;



Language and cultural barriers; and



Potentially adverse tax consequences.

We are exposed to fluctuations in currency exchange rates.

Since a significant portion of our business is conducted outside the U.S., we face substantial
exposure to movements in non-U.S. currency exchange rates. This may harm our results of
operations, and any measures that we may implement to reduce the effect of volatile currencies and
other risks of our global operations may not be effective. We mitigate our foreign currency
exchange rate risk principally through the establishment of local production facilities in the
markets we serve. This creates a natural hedge since purchases and sales within a specific
country are both denominated in the same currency and therefore no exposure exists to hedge with a
foreign exchange forward or option contract (collectively, foreign exchange contracts). Natural
hedges exist in most countries in which we operate, although the percentage of natural offsets, as
compared with offsets that need to be hedged by foreign exchange contracts, will vary from country
to country. To reduce our exposure to fluctuations in currency exchange rates when natural hedges
are not effective, we may use financial instruments to hedge U.S. dollar and other currency
commitments and cash flows arising from trade accounts receivable, trade accounts payable
and fixed purchase obligations.

If these hedging activities are not successful or we change or reduce these hedging activities
in the future, we may experience significant unexpected expenses from fluctuations in exchange
rates or financial instruments which become ineffective. The success of our hedging program
depends on accurate forecasts of transaction activity in the various currencies. To the extent
that these forecasts are over or understated during periods of currency volatility, we could
experience unanticipated currency or hedge gains or losses.

We may find that our products have quality issues.

If flaws in either the design or manufacture of our products were to occur, we could
experience a rate of failure in our products that could result in significant delays in shipment
and product re-work or replacement costs. While we engage in extensive product quality programs
and processes, these may not be sufficient to avoid a product failure rate that results in
substantial delays in shipment, significant repair or replacement costs, or potential damage to our
reputation.

We face risks in integrating acquisitions.

We expect to continue to make investments in companies, products and technologies through
acquisitions. While we believe that such acquisitions are an integral part of our long-term
strategy, there are risks and uncertainties related to acquiring companies. Such risks and
uncertainties include:



Difficulty in integrating acquired operations, technology and products or
realizing cost savings or other anticipated benefits from integration;



Retaining customers and existing contracts;



Retaining the key employees of the acquired operation;



Potential disruption of our or the acquired companys ongoing business;

In 2007, we announced plans to realign part of our manufacturing capacity in order to reduce
costs and better optimize plant utilization. The process of restructuring entails, among other
activities, moving production between facilities, reducing staff levels, realigning our business
processes and reorganizing our management. We continue to evaluate our operations and may need to
undertake additional restructuring initiatives in the future. If we incur additional restructuring
related charges, our financial condition and results of operations may suffer.

In addition, on July 1, 2007 we transitioned to a global organizational structure that
consists of product-focused divisions that will enable us to work more effectively as a global team
to meet customer needs, as well as to better leverage design expertise and the low-cost production
centers we have around the world. This reorganization entails risks, including: the need to
implement financial and other systems and add management resources; in the short-term we may fail
to maintain the quality of products and services we have historically provided; diversion of
managements attention to the reorganization; potential disruption of our ongoing business; and
unanticipated expenses related to such reorganization.

We depend on our key employees and face competition in hiring and retaining qualified employees.

Our future success depends partly on the continued contribution of our key employees,
including executive, engineering, sales, marketing, manufacturing and administrative personnel. We
currently do not have employment agreements with any of our key executive officers. We face
intense competition for key personnel in several of our product and geographic markets. Our future
success depends in large part on our continued ability to hire, assimilate and retain key
employees, including qualified engineers and other highly skilled personnel needed to compete and
develop successful new products. We may not be as successful as competitors at recruiting,
assimilating and retaining highly skilled personnel.

We are subject to various laws and government regulations.

We are subject to a wide and ever-changing variety of U.S. and foreign federal, state and
local laws and regulations, compliance with which may require substantial expense. Of particular
note are two recent European Union (EU) directives known as the Restriction on Certain Hazardous
Substances Directive (RoHS) and the Waste Electrical and Electronic Equipment Directive. These
directives restrict the distribution of products within the EU of certain substances and require a
manufacturer or importer to recycle products containing those substances. Failure to comply with
these directives could result in fines or suspension of sales. Additionally, RoHS may result in
our having non-compliant inventory that may be less readily salable or have to be written off.

In addition, some environment laws impose liability, sometimes without fault, for
investigating or cleaning up contamination on or emanating from our currently or formerly owned,
leased or operated property, as well as for damages to property or natural resources and for
personal injury arising out of such contamination.

We rely on our intellectual property rights.

We rely on a combination of patents, copyrights, trademarks and trade secrets and
confidentiality provisions to establish and protect our proprietary rights. To this end, we hold
rights to a number of patents and registered trademarks and regularly file applications to attempt
to protect our rights in new technology and trademarks. Even if approved, our patents or
trademarks may be successfully challenged by others or otherwise become invalidated for a variety
of reasons. Also, to the extent a competitor is able to reproduce or otherwise capitalize on our
technology, it may be difficult, expensive or impossible for us to obtain necessary legal
protection.

Third parties may claim that we are infringing their intellectual property rights. Such
claims could have an adverse affect on our business and financial condition. From time to time we
receive letters alleging infringement of patents. Litigation concerning patents or other
intellectual property is costly and time consuming. We may seek licenses from such parties, but
they could refuse to grant us a license or demand commercially unreasonable terms. Such
infringement claims could also cause us to incur substantial liabilities and to suspend or
permanently cease the manufacture and sale of affected products.

We could suffer significant business interruptions.

Our operations and those of our suppliers may be vulnerable to interruption by natural
disasters such as earthquakes, tsunamis, typhoons, or floods, or other disasters such as fires,
explosions, acts of terrorism or war, or failures of our management information or other systems.
If a business interruption occurs, our business could be materially and adversely affected.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

We own and lease manufacturing, design, warehousing, sales and administrative space in
locations around the world. The leases are of varying terms with expirations ranging from fiscal
2008 through fiscal 2017. The leases in aggregate are not considered material to the financial
position of Molex.

As of June 30, 2007, we owned or leased a total of approximately 9 million square feet of
space worldwide. We own 90% of our manufacturing, design, warehouse and office space and lease the
remaining 10%. Our manufacturing plants are equipped with machinery, most of which we own and
which, in part, we developed to meet the special requirements of our manufacturing processes. We
believe that our buildings, machinery and equipment are well maintained and adequate for our
current needs.

Our principal executive offices are located at 2222 Wellington Court, Lisle, Illinois, United
States of America. Molex owns 59 manufacturing facilities, 19 of which are located in North
America and 40 of which are located in other countries. A listing of the locations of our principal
manufacturing facilities by region is presented below:

The Commission commenced an informal inquiry into our stock option granting practices,
and the Office of the U.S. Attorney for the Northern District of Illinois has also requested
information on this subject. As previously disclosed, a Special Committee of our Board of
Directors completed a review of our past option granting practices. Although we cannot predict the
outcome of this matter, we do not expect that such matter will have a material adverse effect on
our consolidated financial position or results of operations.

On January 25, 2007, we filed a suit in the United States District Court in Nevada against FCI
Americas Technology, Inc. (FCI) seeking a declaratory judgment that our I-Trac connectors are not
covered by FCIs shieldless connector patents, and further seeking an injunction against FCIs
continued assertions that such connectors infringe any of FCIs patents. Following the filing of
our suit, on January 26, 2007 FCI and FCI USA, Inc. filed a patent infringement suit against us in
the United States District Court in Delaware that alleges that we are infringing certain of their
patents relating to shieldless connectors. We believe that our I-Trac connectors do not infringe
FCIs patents and intend to vigorously pursue our position. Although we cannot predict the outcome
of this matter, we do not expect that it will have a material adverse effect on our consolidated
financial position or results of operations.

On April 25, 2005, our Board of Directors authorized purchases of our outstanding Common Stock
and Class A Common Stock during the period ending December 31, 2006 up to an aggregate value of
$250 million on a discretionary basis. On October 27, 2006, the Board extended this authorization
through September 30, 2007. The following table contains information about our purchases of Molex
equity securities pursuant to the current authorization during the quarter ended June 30, 2007 (in
thousands, except price per share data):

Total Number

of Shares

Purchased As

Total Number

Part of Publicly

of Shares

Average Price

Announced

Purchased

Paid per Share

Plan

Common Stock:

April 1 to April 30

57

$

30.56



May 1 to May 31

130

$

30.52

130

June 1 to June 30



$





Total

187

$

30.53

130

Total Number

of Shares

Purchased As

Total Number

Part of Publicly

of Shares

Average Price

Announced

Purchased

Paid per Share

Plan

Class A Common Stock:

April 1 to April 30

272

$

25.28

170

May 1 to May 31

325

$

27.10

245

June 1 to June 30

10

$

27.70



Total

607

$

26.29

415

As of June 30, 2007, the dollar value of shares that may yet be purchased under the plan
was $15.2 million.

During the quarter ended June 30, 2007, 57,174 shares of Common Stock and 190,964 shares
of Class A Common Stock were transferred to us from certain employees to pay either the purchase
price and/or withholding taxes on the vesting of restricted stock or the exercise of stock options.
The aggregate market value of the shares transferred totaled $6.7 million.

Descriptions of our Common Stock appear under the caption Molex Stock in our 2007 Proxy
Statement and in Note 14 of the Notes to Consolidated Financial Statements.

The performance graph set forth below shows the value of an investment of $100 on June 30,
2002 in each of Molex Common Stock, Molex Class A Common Stock, the S&P 500 Index, and a Peer Group
Index. The Peer Group Index includes 50 companies (including Molex) classified in the Global
Sub-industry Classifications Electronic Equipment Manufacturers, Electronic Manufacturing
Services, and Technology Distributors. All values assume reinvestment of the pre-tax value of
dividends paid by Molex and the companies included in these indices, and are calculated as of June
30 of each year. The historical stock price performance of Molexs Common Stock and Class A Common
Stock is not necessarily indicative of future stock price performance.

Comparison of Five-Year Cumulative Total Return
(Value of Investment of $100 on June 30, 2002)

06/30/02

06/30/03

06/30/04

06/30/05

06/30/06

06/30/07

Molex Incorporated

$

100.00

$

80.89

$

96.39

$

78.67

$

102.19

$

92.22

Molex Incorporated Class A

100.00

84.29

100.31

86.87

107.19

100.13

S&P 500

100.00

100.25

119.41

126.96

137.92

166.32

Peer Group

100.00

88.64

126.85

105.82

124.77

138.14

The material in this performance graph is not soliciting material, is not deemed filed
with the Commission, and is not incorporated by reference in any filing of the Company under the
Securities Act or the Exchange Act, whether made on, before or after the date of this filing and
irrespective of any general incorporation language in such filing.

Fiscal 2007 results include a charge for restructuring costs and asset impairments of
$36.9 million ($30.3 million after-tax). Fiscal 2006 results include a restructuring charge of
$26.4 million ($19.2 million after-tax). Fiscal 2005 results include a charge for
restructuring costs and asset impairments of $30.2 million ($23.0 million after-tax) and a
charge for goodwill impairment of $22.9 million ($22.9 million after-tax). Fiscal 2003
results include a restructuring charge of $35.0 million ($24.8 million after-tax). See Notes 5
and 8 of the Notes to Consolidated Financial Statements for a discussion of our
restructuring costs and goodwill impairment.

(2)

Return on invested capital is defined as the current year net income divided by the sum of
average total assets less average current liabilities for the year.

(3)

Working capital is defined as current assets minus current liabilities.

(4)

Current ratio is defined as current assets divided by current liabilities.

Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations

The following discussion includes the use of organic net revenue growth, a non-GAAP
financial measure. Refer to Non-GAAP Financial Measures below for additional information on the use
of this measure.

Overview

Our core business is the manufacture and sale of electronic components. Our products are used
by a large number of leading original equipment manufacturers (OEMs) throughout the world. We
design, manufacture and sell more than 100,000 products including terminals, connectors, planar
cables, cable assemblies, interconnection systems, backplanes, integrated products and mechanical
and electronic switches. We also provide manufacturing services to integrate specific components
into a customers product.

Our connectors, interconnecting devices and assemblies are used principally in the
telecommunications, data, consumer products, automotive and industrial markets. Our products are
used in a wide range of applications including desktop and notebook computers, computer peripheral
equipment, mobile phones, digital electronics such as cameras and plasma televisions, automobile
engine control units and adaptive braking systems, factory robotics and diagnostic equipment.

We believe that our sales mix is balanced, with growth prospects in a number of markets. Net
revenues by market can fluctuate based on various factors including new technologies within the
industry, composition of customers and new products or model changes that we or our customers
introduce. The approximate percentage of net revenue by market for fiscal years 2007, 2006 and
2005 is outlined below.

% of Net Revenue

2007

2006

2005

Telecommunications

26

%

30

%

27

%

Data Products

21

22

24

Automotive

18

18

19

Consumer

18

19

18

Industrial

15

9

9

Other

2

2

3

Total

100

%

100

%

100

%

We sell our products directly to OEMs and to their contract manufacturers and suppliers and,
to a lesser extent, through distributors throughout the world. Our engineers work collaboratively
with customers to develop products that meet their specific needs. Our connector products are
designed to help manufacturers assemble their own products more efficiently. Our electronic
components help enable manufacturers to break down their production into sub-assemblies that can be
built on different production lines, in different factories or by subcontractors. Our connectors
allow these sub-assemblies to be readily plugged together before selling the end product to a
customer. Our connectors also enable users to connect together related electronic items, such as
mobile phones to battery chargers and computers to printers. Many of our customers are
multi-national corporations that manufacture their products in multiple operations in several
countries.

We service our customers through our global manufacturing footprint. As of June 30, 2007, we
operated 59 manufacturing plants, located in 19 countries on four continents. Manufacturing in many
sectors has continued to move from the United States and Western Europe to lower cost regions. In
addition, reduced trade barriers, lower freight cost and improved supply chain logistics have
reduced the need for duplicate regional manufacturing capabilities. For these reasons, our
strategy has been to consolidate multiple plants of modest size in favor of operating fewer, larger
and more integrated facilities in strategic locations around the world.

During fiscal 2007, we operated our business in the following four geographic regions:
Americas, Europe, Asia Pacific North and Asia Pacific South. In fiscal 2007, 51% of our revenue was
derived from sales in the Asia Pacific North and Asia Pacific South regions. Economic growth in
Asia, particularly in China, is anticipated to be greater than in the Americas and Europe. We
believe that the business is positioned to benefit from this trend. Approximately 50% of our
manufacturing capacity is in lower cost areas such as China, Eastern Europe and Mexico.

The market in which we operate is highly fragmented with a limited number of large companies
and a significant number of smaller companies making electronic connectors. We are the worlds
second-largest manufacturer of electronic connectors. We believe that our global presence and our
ability to design and manufacture our products throughout the world and to service our customers
globally is a key advantage for us. Our growth has come primarily from new products that we
develop, often in collaboration with our customers.

Financial Highlights

Net
revenue for fiscal 2007 of $3.3 billion increased 14.1% over fiscal 2006 net revenue of
$2.9 billion. Organic net revenue growth was 11.8% for fiscal 2007 over 2006. Net income of
$240.8 million for fiscal 2007 increased $4.7 million from $236.1 million reported in the prior
year. Fiscal 2007 includes restructuring costs and asset impairments of $36.9 million ($30.3
million after tax). Fiscal 2006 net income included a restructuring charge of $26.4 million ($19.2
million after-tax).

On August 9, 2006, we completed the acquisition of Woodhead Industries, Inc. (Woodhead) in an
all cash transaction valued at approximately $238.1 million, including the assumption of debt and
net of cash acquired. Woodhead develops, manufactures and markets network and electrical
infrastructure components engineered for performance in harsh, demanding, and hazardous industrial
environments. The acquisition is a significant step in our strategy to expand our products and
capabilities in the global industrial market.

Critical Accounting Estimates

Our accounting and financial reporting policies are in conformity with U.S. generally accepted
accounting principles (GAAP). The preparation of financial statements in conformity with GAAP
requires our management to make estimates and assumptions that affect the reported amounts of
assets and liabilities, the disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenues and expenses during the reporting
period.

Significant accounting policies are summarized in Note 2 of the Notes to Consolidated
Financial Statements. Noted here are a number of policies that require significant judgments or
estimates.

We recognize revenue upon shipment of product and transfer of ownership to the customer.
Contracts and customer purchase orders generally are used to determine the existence of an
arrangement. Shipping documents, proof of delivery and customer acceptance (when applicable) are
used to verify delivery. We assess whether an amount due from a customer is fixed and determinable
based on the terms of the agreement with the customer, including, but not limited to, the payment
terms associated with the transaction. The impact of judgments and estimates on revenue
recognition is minimal. A reserve for estimated returns is established at the time of sale based
on historical return experience to cover returns of defective product and is recorded as a
reduction of revenue.

Deferred tax assets and liabilities are recognized based on differences between the financial
statement and tax bases of assets and liabilities using presently enacted tax rates. We have net
deferred tax assets of $119.8 million at June 30, 2007.

We have operations in countries around the world that are subject to income and other similar
taxes in these countries. The estimation of the income tax amounts that we record involves the
interpretation of complex tax laws and regulations, evaluation of tax audit findings and assessment
of how foreign taxes may affect domestic taxes. Although we believe our tax accruals are adequate,
differences may occur in the future depending on the resolution of pending and new tax matters.

We periodically assess the carrying value of our deferred tax assets based upon our ability to
generate sufficient future taxable income in certain tax jurisdictions. If we determine that we
will not be able to realize all or part of our deferred tax assets in the future, a valuation
allowance is established in the period such determination is made. We have determined that it is
unlikely that we will realize a net deferred asset in the future relating to certain non-U.S. net
operating losses. A valuation allowance of $1.3 million was recorded in fiscal 2007 to offset the
recording of a deferred tax asset of $1.3 million related to certain European net operating losses.
The cumulative valuation allowance relating to net operating losses is approximately $39.4 million
at June 30, 2007.

It is our policy to establish accruals for taxes that may become payable in future years as a
result of examinations by tax authorities. We establish the accruals based upon managements
assessment of probable income tax contingencies. At June 30, 2007, we believe we have
appropriately accrued for probable contingencies. To the extent we were to prevail in matters for
which accruals have been established or would be required to pay amounts in excess of accruals, our
effective tax rate in a given financial statement period could be materially affected.

Inventory

Inventories are valued at the lower of first-in, first-out (FIFO) cost or market value. FIFO
inventories recorded in our consolidated balance sheet are adjusted for an allowance covering
inventories determined to be slow-moving or excess. The allowance for slow-moving and excess
inventories is maintained at an amount management considers appropriate based on factors such as
historical usage of the product, open sales orders and future sales forecasts. If our sales
forecast for specific products is greater than actual demand and we fail to reduce manufacturing
output accordingly, we could be required to write down additional inventory, which would have a
negative impact on gross margin and operating results. Such factors require judgment, and changes
in any of these factors could result in changes to this allowance.

Pension Plans

The costs and obligations of our defined benefit pension plans are dependent on actuarial
assumptions. Three critical assumptions used, which impact the net periodic pension expense
(income) and two of which impact the benefit obligation, are the discount rate, expected return on
plan assets and rate of compensation increase. The discount rate is determined based on
high-quality fixed income investments that match the duration of expected benefit payments. We
have typically used the market rate for AA/Aa rated corporate bonds for this assumption. The
expected return on plan assets represents a forward projection of the average rate of earnings
expected on the pension assets. We have estimated this rate based on historical returns of
similarly diversified portfolios. The rate of compensation increase represents the long-term
assumption for expected increases to salaries for pay-related plans. These key assumptions are
evaluated annually. Changes in these assumptions can result in different expense and liability
amounts.

The effects of the indicated increase and decrease in selected assumptions for our pension
plans as of June 30, 2007, assuming no changes in benefit levels and no amortization of gains or
losses, is shown below (in thousands):

We have retiree health care plans that cover the majority of our U.S. employees. There are no
significant postretirement health care benefit plans outside of the U.S. The health care cost
trend rate assumption has a significant effect on the amount of the accumulated postretirement
benefit obligation (APBO) and retiree health care benefit expense. A 100 basis-point change in the
assumed health care cost trend rates would have the following effects (in thousands):

2007

2006

2005

Effect on total annual service and interest cost:

Increase 100 basis points

$

1,287

$

1,476

$

1,073

Decrease 100 basis points

(1,014

)

(1,211

)

(908

)

Effect on APBO:

Increase 100 basis points

$

9,057

$

9,951

$

8,655

Decrease 100 basis points

(7,270

)

(8,164

)

(7,325

)

Goodwill

Goodwill is recorded when the purchase price paid for an acquisition exceeds the estimated
fair value of the net identified tangible and intangible assets acquired.

We perform an annual goodwill impairment analysis as of May 31, or earlier if indicators of
potential impairment exist. In assessing the recoverability of goodwill, we review both
quantitative as well as qualitative factors to support our assumptions with regard to fair value.
Our impairment review process compares the fair value of the reporting unit in which goodwill
resides to our carrying value. Reporting units may be operating segments as a whole or an
operation one level below an operating segment, referred to as a component. Components are defined
as operations for which discrete financial information is available and reviewed by segment
management.

The fair value of a reporting unit is estimated using a discounted cash flow model for the
evaluation of impairment. The expected future cash flows are based on managements estimates and
are determined by looking at numerous factors including projected economic conditions and customer
demand, revenue and margins, changes in competition, operating costs and new products introduced.
In determining fair value, we make certain judgments. If these estimates or their related
assumptions change in the future as a result of changes in strategy and/or market conditions, we
may be required to record an impairment charge.

Although management believes its assumptions in determining the projected cash flows are
reasonable, changes in those estimates could affect the evaluation.

Restructuring Costs and Asset Impairments

We have recorded charges in connection with restructuring our business. We recognize a
liability for restructuring costs at fair value when the liability is incurred. The main
components of our restructuring plans are related to workforce reductions and the closure and
consolidation of excess facilities. Workforce-related charges are expensed and accrued when it is
determined that a liability is probable, which is generally

after individuals have been notified of their termination dates and expected severance
payments, but under certain circumstances may be recognized upon approval of a restructuring plan
by management or in future accounting periods when terminated employees continue to provide
service. Plans to consolidate excess facilities result in charges for lease termination fees,
future commitments to pay lease charges, net of estimated future sublease income, and adjustments
to the fair value of buildings and equipment to be sold. Charges for the consolidation of excess
facilities are based on an estimate of the amounts and timing of future cash flows related to the
expected future remaining use and ultimate sale or disposal of buildings and equipment.

The timing of the cash expenditures associated with these charges does not necessarily
correspond to the period in which the accounting charge is taken. For additional information
concerning the status of our restructuring programs see Note 5 of the Notes to Condensed
Consolidated Financial Statements. See also Forward-Looking Statements.

Impairment of Long-Lived Assets

In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived
Assets, we assess the impairment of long-lived assets, other than goodwill and trade names,
including property and equipment, and identifiable intangible assets subject to amortization,
whenever events or changes in circumstances indicate the carrying value may not be recoverable.
Factors we consider important, which could trigger an impairment review, include significant
changes in the manner of our use of the asset, changes in historical trends in operating
performance, changes in projected operating performance, and significant negative economic trends.

New Accounting Pronouncements

In September 2006, the Financial Accounting Standards Board (FASB) issued SFAS No. 157, Fair
Value Measurements. The purpose of SFAS No. 157 is to define fair value, establish a framework for
measuring fair value, and enhance disclosures about fair value measurements. The provisions of SFAS
No. 157 are effective for us on July 1, 2008. We are currently evaluating the financial statement
impact of adopting SFAS No. 157, but we do not expect its adoption to have a significant transition
effect.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets
and Financial Liabilities. SFAS No. 159 permits companies to choose to measure certain financial
instruments and certain other items at fair value. The standard requires that unrealized gains and
losses on items for which the fair value option has been elected be reported in earnings. The
provisions of SFAS No. 159 are effective for us on July 1, 2008. We are currently evaluating the
financial statement impact of adopting SFAS No. 159, but we do not expect its adoption to have a
significant transition effect.

In July 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income
Taxes (FIN 48), which, among other things, requires applying a more likely than not threshold to
the recognition and derecognition of tax positions. The provisions of FIN 48 were effective for us
on July 1, 2007. We do not expect its adoption to have a significant effect on our financial
statements.

Results of Operations

Net
revenue for fiscal 2007 of $3.3 billion increased 14.1% over fiscal 2006 net revenue of
$2.9 billion. Organic net revenue growth was 11.8% for fiscal 2007 over 2006. Net income of
$240.8 million for fiscal 2007 increased $4.7 million from $236.1 million reported in the prior
year. Fiscal 2007 includes restructuring costs and asset impairments of $36.9 million ($30.3
million after tax). Fiscal 2006 net income included a restructuring charge of $26.4 million ($19.2
million after-tax). The Woodhead acquisition added $202.5 million of net revenue and $12.2 million
of income from operations to the consolidated operating results in fiscal 2007.

The following table sets forth certain consolidated statements of income data as a percentage
of net

We sell our products in five primary markets. A summary follows of the estimated change in
revenue from each market during the fiscal years ended June 30:

2007

2006

2005

Telecommunications

3

%

25

%

33

%

Data Products

6

3

5

Automotive

11

6

27

Consumer

9

19

(3

)

Industrial

100

12

2

Telecommunications was our best performing market in fiscal years 2006 and 2005 but increased only slightly in fiscal 2007. While we experienced strong revenue growth in the telecommunications
market in late fiscal 2006 and early 2007, we experienced a sharp decline in revenue from mobile
phone customers during the second half of fiscal 2007. While the majority of these issues were
customer specific, the overall mobile phone market is currently being driven by growth in entry
level phones having lower functionality and connector content, resulting in lower demand for our
products. We believe this is the result of initial demand in the developing economies, and that
these large markets will eventually transition to more sophisticated higher connector content
devices.

While revenue in the consumer and data markets increased in fiscal 2007 compared with 2006,
revenue in these markets declined during the second half of fiscal 2007 compared with the same
period in fiscal 2006, due in part to concerns regarding consumer spending as well as lingering
inventory corrections at some of our larger customers.

Woodhead contributed 84% of the 100% growth in industrial sales in fiscal 2007 compared with
the prior year.

The following table provides an analysis of the change in net revenue compared with the prior
fiscal year (in thousands):

2007

2006

2005

Change in net revenue due to:

Organic net revenue growth

$

141,887

$

337,621

$

233,297

Currency translation

60,219

(30,790

)

72,143

Woodhead acquisition

202,479





Total

$

404,585

$

306,831

$

305,440

Organic net revenue growth percentage

5.0

%

13.2

%

10.4

%

Organic net revenue growth was derived primarily from unit volume increases with existing
customers and existing products and sales of new products. We estimate that the impact of price
erosion reduced revenue by approximately $131.4 million in fiscal 2007 compared with the prior
year. A significant portion of the price erosion occurred in our mobile phone connector products,
which are part of our telecommunications market.

The increase in net revenue attributed to currency translation in fiscal 2007 compared with
2006 was principally due to the strengthening of the euro, Singapore dollar and Korean won against
the U.S. dollar. The decrease in net revenue attributed to currency translation in fiscal 2006
compared with 2005 was principally due to the strengthening of the U.S. dollar against the yen and
euro.

We operate in one product segment, the manufacture and sale of electronic components, and four
regions. Woodhead is included in corporate and other for fiscal 2007. Revenue is recognized based
on the location of the selling entity. The following table sets forth information on customer
revenue by geographic region for the periods indicated (in thousands):

Percentage

Percentage

Percentage

(in thousands)

2007

of Revenue

2006

of Revenue

2005

of Revenue

Americas

$

783,464

24.0

%

$

793,296

27.7

%

$

701,470

27.5

%

Asia Pacific North

510,311

15.6

%

450,860

15.8

%

461,873

18.0

%

Asia Pacific South

1,128,034

34.5

%

1,036,892

36.2

%

835,368

32.7

%

Europe

556,096

17.0

%

511,375

17.9

%

505,953

19.8

%

Corporate and other

287,969

8.9

%

68,866

2.4

%

49,794

2.0

%

Total

$

3,265,874

100.0

%

$

2,861,289

100.0

%

$

2,554,458

100.0

%

We believe that the recent trend of moving original equipment manufacturers and contract
manufacturers production to lower cost countries in Asia and Eastern Europe is positively
contributing to revenue in those regions of our business. This trend has resulted in lower revenue
growth in higher cost regions such as the Americas and Western Europe.

We continued our long-term commitment to reinvesting our profits in new product design and
tooling to maintain and enhance our competitive position. We believe that new products are
essential to enable our customers to advance their solutions and their market leadership positions.
Additionally, we believe that new products tend to have a higher gross profit as a percentage of
revenue, but may be subject to higher price erosion as unit volumes grow, production experience is
accumulated and costs decrease. Revenue derived from the sale of new products we released within
the last 36 months as a percentage of net revenue was as follows for the fiscal years ended June
30:

2007

2006

2005

Americas

25

%

25

%

22

%

Asia Pacific North

30

23

35

Asia Pacific South

31

33

36

Europe

24

27

27

Total

27

%

28

%

30

%

Americas Region North and South America

The following table provides an analysis of the change in net revenue compared with the prior
fiscal year (in thousands):

2007

2006

2005

Change in revenue due to:

Organic net revenue growth

$

(10,746

)

$

82,322

$

13,011

Currency translation

914

9,504

2,330

Total

$

(9,832

)

$

91,826

$

15,341

Organic net revenue growth percentage

(1.4

)%

11.7

%

1.9

%

Revenue for the Americas region decreased by $9.8 million, or 1.2%, in fiscal 2007 compared
with 2006. The most significant factor in this decline was due to closure of our production
facilities in Brazil. Brazil revenue for fiscal 2007 declined $41.2 million compared with the prior
year period. The Americas region was favorably impacted by higher revenue in the automotive
market, which was primarily due to new program wins and higher electronic content in vehicles.

Revenue for the Americas region increased by $91.8 million, or 13.1%, in fiscal 2006 compared
with 2005. The increase was mostly due to stronger demand and new product offerings for electronic
connector products, particularly in high performance applications. We experienced some recovery in
the telecommunications market, resulting in demand for cable harnesses in that area. Demand for
these products was significantly higher during the second half of fiscal 2006 compared with the
prior year period partially because in 2006 the seasonally slow third fiscal quarter was instead
relatively consistent with volumes in the second fiscal quarter.

Asia Pacific North Region  Japan and Thailand

The following table provides an analysis of the change in net revenue compared with the prior
fiscal year (in thousands):

Revenue for the Asia Pacific North region increased by $59.5 million, or 13.2%, in fiscal 2007
compared with 2006. Organic net revenue growth was 15.3% in fiscal 2007 compared with 2006 mostly
due to stronger demand in the consumer and industrial markets. We believe that we are well
positioned for growth in the satellite radio and games segment, where we have significant connector
content in Pachinko game machines and on the new Wii machine and the Sony PS3.

While demand for high-end mobile phones declined during the second half of fiscal 2007, the
region continues to capitalize on its ability to design compact, higher performance products for
the sophisticated end of the mobile phone business in the telecommunications market. The region
has developed connectors for third generation (3G) phones. We believe that we are well positioned
to grow our 3G technology business as global cell phone makers adopt this technology.

Organic net revenue growth for the Asia Pacific North region increased by $12.7 million in
fiscal 2006 compared with 2005, primarily due to stronger demand in the consumer and telecom
markets. Demand in these markets increased steadily during fiscal 2006 and was stronger during the
second half of fiscal 2006 compared with the prior year even though the second half of the year is
generally seasonally lower for the telecommunications and consumer markets.

The Asia Pacific North region generally operates at a high capacity level with significant
resources allocated to support higher demand in the Asia Pacific South region. Revenue between
regions is generally recognized as intercompany revenue, which is excluded from the revenue by
region table above.

The following table provides an analysis of the change in net revenue compared with the prior
fiscal year (in thousands):

2007

2006

2005

Change in revenue due to:

Organic net revenue growth

$

65,071

$

192,370

$

152,160

Currency translation

26,071

9,154

8,098

Total

$

91,142

$

201,524

$

160,258

Organic net revenue growth percentage

6.3

%

23.0

%

22.5

%

Revenue for the Asia Pacific South region increased by $91.1 million, or 8.8%, in fiscal 2007
compared with 2006. Organic net revenue growth was 6.3% in fiscal 2007 compared with 2006 mostly
due to demand from the mobile phone, computer and telecommunications infrastructure sectors,
although beginning during the second quarter of fiscal 2007, we experienced lower demand in the
mobile phone and computer businesses. This lower demand resulted in Asia Pacific South revenue
declining during the second half of fiscal 2007 and a lower overall growth rate for the year
compared with fiscal 2006 and 2005 growth.

The Asia Pacific South region is our largest and has generally been one of our fastest growing
in terms of revenue. Sales in China represent 63% of total Asia Pacific South sales for the year
ended June 30, 2007 increasing 12.1% compared with the prior year period. The drivers of this
growth included overall higher demand in the mobile phone, consumer electronics and computer
markets and the trend of companies

moving their design and production to China. A significant portion of our integrated products
that require a higher level of manual assembly are produced in China.

Organic net revenue growth for the Asia Pacific South region increased by $192.4 million in
fiscal 2006 compared with 2005, primarily due to strong demand in the mobile phone and consumer
products markets. Demand for these products was significantly higher during the second half of
2006 compared with the same period in the prior year primarily because the inventory correction and
reduction in demand that occurred in the third fiscal quarter of 2005 did not recur in fiscal 2006.

European Region

The following table provides an analysis of the change in net revenue compared with the prior
fiscal year (in thousands):

2007

2006

2005

Change in revenue due to:

Organic net revenue growth

$

5,458

$

30,958

$

85,755

Currency translation

39,263

(25,536

)

34,551

Total

$

44,721

$

5,422

$

120,306

Organic net revenue growth percentage

1.1

%

6.1

%

22.2

%

Revenue for the European region increased by $44.7 million, or 8.8%, in fiscal 2007 compared
with 2006, mostly due to currency translation. Organic net revenue growth was primarily due to
higher revenue from consumer products in the industrial market.

Revenue for the European region increased by $5.4 million, or 1.1%, in fiscal 2006 compared
with 2005. Organic net revenue growth of $31.0 million was mostly due to a slight recovery in
demand for general connector products, increased sales of integrated products and additional
penetration in the automotive market in which we participate. Customer revenue in the European
region began improving during the third fiscal quarter and increased during the second half of
fiscal 2006 compared with the prior year period.

The region is focused on the strongest markets that we believe are most likely to remain in
Europe. These include connectors and integrated products for industrial, medical and automotive
applications.

Gross Profit

The following table provides summary of gross profit and gross margin compared with the prior
fiscal year (in thousands):

2007

2006

2005

Gross profit

$

1,016,708

$

942,630

$

832,662

Gross margin

31.1

%

32.9

%

32.6

%

The impact of certain margin drivers compared with the prior year period was as follows (in thousands):

Gross profit for the company increased by $74.1 million, or 7.9%, in fiscal 2007 compared
with 2006. Gross margin declined to 31.1% in fiscal 2007 from 32.9% in the prior year primarily due
to higher price erosion, higher raw material costs and increased depreciation expense. The negative
effect from price erosion that impacted our mobile phone business beginning in the second quarter
of fiscal 2007 continued throughout the remainder of the fiscal year. Higher commodity costs,
along with the impact of price erosion, were partially offset by selective price increases that
were effective in February and September 2006, improvements in manufacturing efficiencies and
favorable changes in currency exchange rates.

Certain products that we manufacture in Japan and Europe are sold in other regions of the
world at selling prices primarily denominated in or closely linked to the U.S. dollar. As a
result, changes in currency exchange rates may affect our cost of sales reported in U.S. dollars
without a corresponding effect on net revenue. The increase in gross profit due to currency
transaction gains was primarily due to a weaker yen relative to other currencies during fiscal 2007
compared with fiscal 2006 and fiscal 2006 compared with fiscal 2005.

Gross profit for the company increased by $110.0 million, or 13.2%, in fiscal 2006 compared
with 2005. Gross profit increased primarily due to the increase in net revenue. Gross margin during
fiscal 2006, compared with the prior year period, was higher primarily due to operating
efficiencies gained in the Asia Pacific South region, focus on higher margin products in the
Americas region and selective price increases, offset by price erosion and higher commodity costs.

Operating Expenses

Operating expenses for the three years ended June 30, 2007 were as follows (in thousands):

2007

2006

2005

Selling, general & administrative

$

658,289

$

606,532

$

576,354

Selling, general & administrative as a percentage
of revenue

20.1

%

21.1

%

22.6

%

Restructuring costs and
asset impairments

36,869

26,354

30,168

The decrease in selling, general and administrative expense as a percent of net revenue in
fiscal 2007 and compared with 2006 and in fiscal 2006 compared with fiscal 2005 was primarily due
to a lower cost structure resulting from our 2005 restructuring initiative, lower incentive
compensation expense in 2007 and specific cost containment activities.

The impact of currency translation increased selling, general and administrative expenses by
approximately $12.4 million for fiscal 2007 compared with 2006 and decreased selling, general and
administrative expenses by approximately $11.8 million for fiscal 2006 compared with 2005.

Research and development expenditures, which are classified as selling, general and
administrative expense, were 4.9% of net revenue for fiscal years 2007 and 2006 and 5.2% of net
revenue for fiscal 2005.

Effective July 1, 2007, we transitioned to a global organizational structure that consists
of product-focused divisions. This structure consists of five
global divisions and one worldwide sales and marketing organization. When fully implemented, we
expect the new structure to enable us to work more effectively as a global team to meet customer
needs as well as to better leverage our design expertise and the low-cost production centers around
the world. The new worldwide sales and marketing organization structure will enhance our ability to
sell any product, to any customer, anywhere in the world.

In connection with this transition, we undertook in fiscal 2007 a multi-year restructuring
plan designed to reduce costs and to improve return on invested capital. A majority of the plan
relates to facilities

located in the Americas and European regions and in general, the movement of manufacturing
activities at these plants to other facilities. A portion of this plan involves cost savings or
other actions that do not result in incremental expense, such as better utilization of assets,
reduced spending and organizational efficiencies. This plan includes headcount reduction targets
throughout the company, and we expect to achieve these targets through ongoing employee attrition
and terminations as detailed below.

We expect to complete the actions under this plan by June 30, 2009, and incur restructuring and asset impairment
costs related to these actions ranging from $100  $125 million, of which the impact on each region will be determined as
the actions become more certain.
We expect that when fully implemented by the close of fiscal 2009, the annualized pretax savings from the restructuring activities will be in the range of $75 to $100 million. We estimate pretax savings of $20 to $25 million in fiscal 2008.

Management and the Board of Directors approved several actions related to this plan during
fiscal 2007 that resulted in severance and benefit costs of $26.7 million for the reduction of
approximately 335 employees. A substantial majority of employee terminations occurred within our
Ireland manufacturing operations and various administrative functions in the Americas and European
regions. In addition, we have vacated or plan to vacate several buildings and are holding these
buildings and related assets for sale. Our plans resulted in an impairment charge of $8.7 million
to write-down to fair value less the cost to sell the land, building and equipment asset groupings.
The fair value of the asset groupings was determined using various valuation techniques. Other
restructuring related costs approximated $1.5 million.

During fiscal 2005, we decided to close certain operations in the Americas and European
regions in order to reduce operating costs and better align our manufacturing capacity with
customer needs. Production from the operations closed has been transferred to existing plants
within the respective regions. Also included in the restructuring charge are costs to reduce our
selling, general and administrative costs in the Americas, Europe and at the corporate office. We
reduced headcount by approximately 500 people after additions at the facilities where production
was transferred. We substantially completed these restructuring activities as of June 30, 2006.
We incurred charges of $26.4 million in fiscal 2006, of which $23.5 million was related to
severance costs and $2.9 million was related to asset impairments. We incurred charges of $30.2
million in fiscal 2005, of which $15.7 million was related to severance costs and $14.5 million was
related to asset impairments.

The timing of the cash expenditures associated with these charges does not necessarily
correspond to the period in which the accounting charge is taken. For additional information
concerning the status of our restructuring programs see Note 5 of the Notes to Condensed
Consolidated Financial Statements. See also Forward-Looking Statements.

Effective Tax Rate

The effective tax rate for the three years ended June 30, 2007 was as follows:

2007

2006

2005

Effective tax rate

28.8

%

28.0

%

32.7

%

The effective rate in fiscal 2007 was substantially unchanged from 2006. The rate decreased
in fiscal 2006 compared with 2005 primarily due to non-deductible goodwill impairment of $22.9
million in 2005 and greater valuation allowances in 2005 for losses incurred for which no tax
benefit could be recorded.

Backlog

Backlog as of the three years ended June 30, 2007 was as follows (in thousands):

2007

2006

2005

Backlog

$

332,479

$

369,966

$

259,472

Backlog decreased as of June 30, 2007 compared with June 30, 2006, primarily due to a decrease
in demand at the end of fiscal 2007, particularly in the mobile communications market, and an
increase in

vendor managed inventory programs to customers. Under the vendor managed inventory program,
the new order and shipment occur simultaneously and without impacting reported backlog. The
decrease in backlog as of June 30, 2007 compared with 2006 was offset by the acquisition of
Woodhead, which had backlog of $24.3 million on June 30, 2007.

Backlog increased as of June 30, 2006 compared with June 30, 2005, primarily due to higher
demand at the end of fiscal 2006.

Non-GAAP Financial Measures

Organic net revenue growth, which is included in the discussion above, is a non-GAAP financial
measure. The difference between reported net revenue growth (the most directly comparable GAAP
financial measure) and organic net revenue growth (the non-GAAP measure) consists of the impact
from foreign currency exchange rates and the acquisition of Woodhead. Organic net revenue growth is
a useful measure which we use to measure the underlying results and trends in our business. It
excludes items that are not completely under managements control, such as the impact of changes in
foreign currency exchange rates, and items that do not reflect the underlying growth of the
company, such as acquisition activity.

We believe organic net revenue growth provides useful information to investors because it
reflects the underlying growth from the ongoing activities of our business. Furthermore, it
provides investors with a view of our operations from managements perspective. We use organic net
revenue growth to monitor and evaluate performance, as it is an important measure of the underlying
results of our operations. Management uses organic net revenue growth together with GAAP measures
such as net revenue growth and operating income in its decision making processes related to the
operations of our reporting segments and our overall company. We believe that investors benefit
from having access to the same financial measures that management uses in evaluating operations.
The discussion and analysis of organic net revenue growth in Results of Operations above utilizes
organic net revenue growth as management does internally. Because organic net revenue growth
calculations may vary among other companies, organic net revenue growth amounts presented above may
not be comparable with similarly titled measures of other companies. Organic net revenue growth is
a non-GAAP financial measure that is not meant to be considered in isolation or as a substitute for
GAAP measures. The limitation of this measure is that it excludes items that have an impact on our
net sales. This limitation is best addressed by using net revenue growth in combination with our
U.S. GAAP net revenue. The tables presented in Results of Operations above provide reconciliations
of U.S. GAAP reported net revenue growth to organic net revenue growth.

Financial Condition and Liquidity

Our financial position remains strong and we continue to be able to fund capital projects and
working capital needs principally out of operating cash flows and cash reserves. Cash, cash
equivalents and marketable securities totaled $460.9 million and $485.5 million at June 30, 2007
and 2006, respectively, of which approximately $371.7 was in non-U.S. accounts as of June 30, 2007.
Transfering cash, cash equivalent or marketable securities to U.S. accounts from non-U.S. accounts
could subject us to additional U.S. repatriation income tax.

Our long-term financing strategy is to primarily rely on internal sources of funds for
investing in plant, equipment and acquisitions. Management believes that our liquidity and
financial flexibility are adequate to support both current and future growth. We have historically
used external borrowings only when a clear financial advantage exists. Long-term debt and
obligations under capital leases at June 30, 2007 totaled $130.8 million. We have available lines
of credit totaling $ 181.6 million at June 30, 2007.

Cash provided from operating activities increased by $7.6 million for fiscal 2007 from fiscal
2006 primarily due to higher net income as adjusted for non-cash items in fiscal 2006 offset by an
increase in working capital. The working capital increase was primarily due to the revenue growth
for fiscal 2007 compared with the prior year. Working capital is defined as current assets minus
current liabilities.

Cash provided from operating activities increased by $13.0 million for fiscal 2006 from fiscal
2005 primarily due to higher net income as adjusted for non-cash items in fiscal 2006 offset by an
increase in working capital. The working capital increase was primarily due to the revenue growth
for fiscal 2006 compared with the prior year.

Investing Activities

On August 9, 2006, we completed the acquisition of Woodhead in an all cash transaction for
approximately $238.1 million, including the assumption of debt and net of cash acquired.
Capital expenditures increased $20.1 million for fiscal 2007 compared with fiscal 2006 in
order to provide increased capacity in the Americas, Asia Pacific North and European regions.
Capital expenditures increased $45.9 million for fiscal 2006 compared with fiscal 2005 in order to
provide increased capability in the Asia Pacific North region and increased capability and capacity
in the Americas and Asia Pacific South regions.

Cash flow from investing activities also includes proceeds from marketable securities in the
net amount of $71.2 million in fiscal 2007 and $37.3 million in fiscal 2006 and investments in
marketable securities in the net amount of $83.5 million in fiscal 2005. Our marketable securities
generally have a term of less than one year. Our uses of or investments in marketable securities
are primarily based on our uses of cash in operating, other investing and financing activities.

Financing Activities

In order to fund the cash portion of our investment in Woodhead made during fiscal 2007, we
entered into two term notes aggregating 15 billion Japanese yen ($121.8 million) and borrowed $44.0
million on our unsecured revolving credit line. The term notes have three-year terms with
weighted-average fixed interest rates approximating 1.3%. The $44.0 million that we borrowed on our
unsecured revolving line of credit was repaid during the second quarter of fiscal 2007.

We purchased shares of Common Stock and Class A Common Stock totaling 1.2 million shares, 6.0
million shares and 2.4 million shares during fiscal years 2007, 2006 and 2005, respectively. The
aggregate cost of these purchases was $34.9 million, $165.3 million and $58.2 million in fiscal
years 2007, 2006 and 2005, respectively.

Our Board of Directors authorized the repurchase of up to an aggregate $250.0 million of
common stock through September 30, 2007. Approximately $15.2 million was remaining under the
authorization as of June 30, 2007.

We have sufficient cash balances and cash flow to support our planned growth. As part of our
growth strategy, we may, in the future, acquire other companies in the same or complementary lines
of business, and pursue other business ventures. The timing and size of any new business ventures
or acquisitions we complete may impact our cash requirements and debt balances.

Contractual Obligations and Commercial Commitments

The following table summarizes our significant contractual obligations at June 30, 2007, and
the effect such obligations are expected to have on liquidity and cash flows in future periods (in
thousands).

Less Than

1-3

3-5

More Than

Total

1 Year

Years

Years

5 Years

Operating lease obligations

$

36,014

$

13,870

$

9,616

$

5,972

$

6,556

Capital lease obligations

5,954

2,930

2,910

112

2

Other long-term liabilities

14,663

2,983

2,169

1,059

8,452

Debt obligations

129,046

1,280

123,929

3,633

204

Total (1)

$

185,677

$

21,063

$

138,624

$

10,776

$

15,214

(1)

Total does not include contractual obligations recorded on the balance sheet as
current liabilities or certain purchase obligations, as discussed below. Debt and capital lease
obligations include interest payments.

Contractual obligations for purchases of goods or services are defined as agreements that are
enforceable and legally binding on us and that specify all significant terms, including fixed or
minimum quantities to be purchased; fixed, minimum or variable price provisions; and the
approximate timing of the transaction. Our purchase orders are based on current manufacturing
needs and are fulfilled by vendors within short time horizons. In addition, some purchase orders
represent authorizations to purchase rather than binding agreements. We do not generally have
significant agreements for the purchase of raw materials or other goods specifying minimum
quantities and set prices that exceed expected requirements for three months. Agreements for
outsourced services generally contain clauses allowing for cancellation without significant
penalty, and are therefore not included in the table above.

The expected timing of payments of the obligations above is estimated based on current
information. Timing of payments and actual amounts paid may be different, depending on the time of
receipt of goods or services, or changes to agreed-upon amounts for some obligations.

Off-Balance Sheet Arrangements

An off-balance sheet arrangement is any contractual arrangement involving an unconsolidated
entity under which a company has (i) made guarantees, (ii) a retained or a contingent interest in
transferred assets, (iii) any obligation under certain derivative instruments or (iv) any
obligation under a material variable interest in an unconsolidated entity that provides financing,
liquidity, market risk, or credit risk support to a company, or engages in leasing, hedging, or
research and development services within a company.

We do not have material exposure to any off-balance sheet arrangements. We do not have any
unconsolidated special purpose entities.

We are subject to market risk associated with changes in foreign currency exchange rates,
interest rates and certain commodity prices.

We mitigate our foreign currency exchange rate risk principally through the establishment of
local production facilities in the markets we serve. This creates a natural hedge since
purchases and sales within a specific country are both denominated in the same currency and
therefore no exposure exists to hedge with a foreign exchange forward or option contract
(collectively, foreign exchange contracts). Natural hedges exist in most countries in which we
operate, although the percentage of natural offsets, as compared with offsets that need to be
hedged by foreign exchange contracts, will vary from country to country.

We also monitor our foreign currency exposure in each country and implement strategies to
respond to changing economic and political environments. Examples of these strategies include the
prompt payment of intercompany balances utilizing a global netting system, the establishing of
contra-currency accounts in several international subsidiaries, development of natural hedges and
use of foreign exchange contracts to protect or preserve the value of cash flows. No material
foreign exchange contracts were in use at June 30, 2007 and 2006.

We have implemented a formalized treasury risk management policy that describes the procedures
and controls over derivative financial and commodity instruments. Under the policy, we do not use
derivative financial or commodity instruments for speculative or trading purposes, and the use of
such instruments is subject to strict approval levels by senior management. Typically, the use of
derivative instruments is limited to hedging activities related to specific foreign currency cash
flows and net receivable and payable balances.

The translation of the financial statements of the non-North American operations is impacted
by fluctuations in foreign currency exchange rates. The increase in consolidated net revenue and
income from operations was impacted by the translation of our international financial statements
into U.S. dollars resulting in increased net revenue of $60.2 million and increased income from
operations of $1.2 million for 2007, compared with the estimated results for 2007 using the average
rates for 2006.

Our $82.5 million of marketable securities at June 30, 2007 are principally debt instruments
that generate interest income for us on temporary excess cash balances. These instruments contain
embedded derivative features that enhance the liquidity of the portfolio by enabling us to
liquidate the instrument prior to the stated maturity date. Our exposure related to derivative
instrument transactions is, in the aggregate, not material to our financial position, results of
operations or cash flows.

Interest rate exposure is limited to our marketable securities and long-term debt. We do not
actively manage the risk of interest rate fluctuations. However, such risk is mitigated by the
relatively short-term nature of our investments (less than 12 months) and the fixed-rate nature of
our long-term debt.

Due to the nature of our operations, we are not subject to significant concentration risks
relating to customers, products or geographic locations.

We monitor the environmental laws and regulations in the countries in which we operate. We
have implemented an environmental program to reduce the generation of potentially hazardous
materials during our manufacturing process and believe we continue to meet or exceed local
government regulations.

Molex Incorporated (together with its subsidiaries, except where the context otherwise
requires, we, us and our) manufactures electronic components, including electrical and fiber
optic interconnection products and systems, switches and integrated products in 59 plants in 19
countries on four continents.

2. Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of Molex Incorporated and our
majority-owned subsidiaries. All material intercompany balances and transactions are eliminated in
consolidation. Equity investments in which we exercise significant influence but do not control
and are not the primary beneficiary are accounted for using the equity method. Investments in
which we are not able to exercise significant influence over the investee are accounted for under
the cost method.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally
accepted in the United States requires the use of estimates and assumptions related to the
reporting of assets, liabilities, revenues, expenses and related disclosures. Actual results could
differ from these estimates.

Currency Translation

Assets and liabilities of international entities are translated at period-end exchange rates
and income and expenses are translated using weighted-average exchange rates for the period.
Translation adjustments are included as a component of accumulated other comprehensive income.

Cash and Cash Equivalents

We consider all liquid investments with original maturities of three months or less to be cash
equivalents.

Marketable Securities

Marketable securities consist of government and municipal debt securities and are carried at
fair value, which is determined based on quoted market prices. We generally hold these instruments
for three to 12 months. These instruments contain embedded derivative features that enhance the
liquidity of the portfolio by enabling us to liquidate the instrument prior to the stated maturity
date. Marketable securities are classified as available-for-sale securities and, accordingly,
mark-to-market adjustments are recorded in other comprehensive income.

No mark-to-market adjustments were required during fiscal years 2007, 2006 or 2005 because the
carrying value of the securities approximated the market value. Proceeds from sales of
available-for-sales securities, excluding maturities, during fiscal years 2007, 2006 and 2005 were
$273.1 million, $532.1 million and $279.6 million, respectively. There were no associated gains or
losses on these sales.

In the normal course of business, we extend credit to customers that satisfy pre-defined
credit criteria. We believe that we have little concentration of credit risk due to the diversity
of our customer base. Accounts receivable, as shown on the Consolidated Balance Sheets, were net
of allowances and anticipated discounts. An allowance for doubtful accounts is determined through
analysis of the aging of accounts receivable at the date of the financial statements, assessments
of collectibility based on historical trends and an evaluation of the impact of current and
projected economic conditions. We monitor the collectibility of our accounts receivable on an
ongoing basis by analyzing the aging of our accounts receivable, assessing the credit worthiness of
our customers and evaluating the impact of reasonably likely changes in economic conditions that
may impact credit risks. Our accounts receivable are not collateralized.

Inventories

Inventories are valued at the lower of first-in, first-out cost or market value.

Property, Plant and Equipment

Property, plant and equipment are reported at cost less accumulated depreciation.
Depreciation is primarily recorded on a straight-line basis for financial statement reporting
purposes and using a combination of accelerated and straight-line methods for tax purposes.

The estimated useful lives are as follows:

Buildings

25  40 years

Machinery and equipment

3  10 years

Molds and dies

2  4 years

We perform reviews for impairment of long-lived assets whenever adverse events or
circumstances indicate that the carrying value of an asset may not be recoverable. When indicators
of impairment are present, we evaluate the carrying value of the long-lived assets in relation to
the operating performance and future undiscounted cash flows of the underlying assets. We adjust
the net book value of the underlying assets to fair value if the sum of the expected undiscounted
future cash flows is less than book value.

Goodwill

Goodwill is recorded when the purchase price paid for an acquisition exceeds the estimated
fair value of the net identified tangible and intangible assets acquired. We perform an annual
review in the fourth quarter of each year, or more frequently if indicators of potential impairment
exist, to determine if the carrying value of the recorded goodwill is impaired. The impairment
review process compares the fair value of the reporting unit in which goodwill resides to its
carrying value. Reporting units may be operating segments as a whole or an operation one level
below an operating segment, referred to as a component.

Pension and Other Postretirement Plan Benefits

Pension and other postretirement plan benefits are expensed as employees earn such benefits.
The recognition of expense is significantly impacted by estimates made by management such as
discount rates used to value certain liabilities, expected return on assets and future healthcare
costs. We use third-party specialists to assist management in appropriately measuring the expense
associated with pension and other postretirement plan benefits.

We recognize revenue when in the normal course of our business the following conditions are
met: (i) a purchase order has been received from the customer with a corresponding order
acknowledgement sent to the customer confirming delivery, price and payment terms, (ii) product has
been shipped (FOB origin) or delivered (FOB destination) and title has clearly transferred to the
customer or customer carrier, (iii) the price to the buyer is fixed and determinable for sales with
an estimate of allowances made based on historical experience and (iv) there is reasonable
assurance of collectibility.

We record revenue on a consignment sale when a customer has taken title of product which is
stored in either the customers warehouse or that of a third party.

From time to time, we will discontinue or obsolete products that we have formerly sold. When
this is done, an accrual for estimated returns is established at the time of the announcement of
product discontinuation or obsolescence.

We typically warrant that our products will conform to Molex specifications and that our
products will be free from material defects in materials and manufacturing, and limit our liability
to the replacement of defective parts or the cash value of replacement parts. We will not accept
returned goods unless the customer makes a claim in writing and management authorizes the return.
Returns result primarily from defective products or shipping discrepancies. A reserve for
estimated returns is established at the time of sale based on historical return experience and is
recorded as a reduction of revenue.

We provide certain distributors with an inventory allowance for returns or scrap equal to a
percentage of qualified purchases. At the time of sale, we record as a reduction of revenue a
reserve for estimated inventory allowances based on a fixed percentage of sales that we authorized
to distributors.

From time to time we in our sole discretion will grant price allowances to customers. At the
time of sale, we record as a reduction of revenue a reserve for estimated price allowances based on
historical allowances authorized and approved solely at our discretion.

Other allowances include customer quantity and price discrepancies. At the time of sale, we
record as a reduction of revenue a reserve for other allowances based on historical experience. We
believe we can reasonably and reliably estimate the amounts of future allowances.

Research and Development

Costs incurred in connection with the development of new products and applications are charged
to operations as incurred. Research and development costs are included in selling, general and
administrative expenses and totaled $159.1 million, $140.9 million and $133.6 million in fiscal
2007, 2006 and 2005, respectively.

Income Taxes

Deferred tax assets and liabilities are recognized based on differences between the financial
statement and tax bases of assets and liabilities using presently enacted tax rates. We have
operations that are subject to income and other similar taxes in foreign countries. The estimation
of the income tax amounts that we record involves the interpretation of complex tax laws and
regulations, evaluation of tax audit findings and assessment of the impact foreign taxes may have
on domestic taxes. A valuation allowance is provided to offset deferred tax assets if, based on
available evidence, it is more likely than not that some or all of the deferred tax assets will not
be realized.

We use derivative instruments primarily to hedge activities related to specific foreign
currency cash flows. We had no material derivatives outstanding at June 30, 2007 or 2006. The net
impact of gains and losses on such instruments was not material to the results of operations for
fiscal 2007, 2006 and 2005.

Stock-Based Compensation

We have granted nonqualified and incentive stock options and restricted stock to our
directors, officers and employees under our stock plans pursuant to the terms of such plans.

Prior to July 1, 2005, we had accounted for share-based compensation programs according to the
provisions of Accounting Principles Board Opinion (APB) No. 25, Accounting for Stock Issued to
Employees, as permitted by Statement of Financial Accounting Standards (SFAS) No. 123, Accounting
for Stock-Based Compensation. Effective July 1, 2005, we adopted the fair value recognition
provisions of SFAS No. 123(R), Share-Based Payment using the modified-prospective-transition
method. Under that transition method, compensation cost recognized in fiscal 2006 included (i)
compensation cost for all share-based payments granted prior to, but not yet vested as of July 1,
2005, based on the grant date fair value estimated in accordance with the original provisions of
SFAS No. 123, and (ii) compensation cost for all share-based payments granted subsequent to July 1,
2005, based on the grant-date fair value estimated in accordance with the provisions of SFAS No.
123(R). As a result of adopting SFAS No. 123(R), deferred unearned compensation of $38.4 million
was reclassified to paid-in capital on July 1, 2005.

The following table illustrates the effect on net income and earnings per share for fiscal
2005 had we applied the fair value recognition provisions of SFAS No. 123 (in thousands, except per
share data):

In September 2006, the Financial Accounting Standards Board (FASB) issued SFAS No. 157, Fair
Value Measurements. The purpose of SFAS No. 157 is to define fair value, establish a framework for
measuring fair value, and enhance disclosures about fair value measurements. The provisions of SFAS
No. 157 are effective for us on July 1, 2008. We are currently evaluating the financial statement
impact of adopting SFAS No. 157, but we do not expect its adoption to have a significant transition
effect.

Fair Value Options

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets
and Financial Liabilities. SFAS No. 159 permits companies to choose to measure certain financial
instruments and certain other items at fair value. The standard requires that unrealized gains and
losses on items for

which the fair value option has been elected be reported in earnings. The provisions of SFAS
No. 159 are effective for us on July 1, 2008. We are currently evaluating the financial statement
impact of adopting SFAS No. 159, but we do not expect its adoption to have a significant transition
effect.

Accounting for Uncertain Tax Positions

In July 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income
Taxes (FIN 48), which, among other things, requires applying a more likely than not threshold to
the recognition and derecognition of tax positions. The provisions of FIN 48 will be effective for
us on July 1, 2007. We do not expect its adoption to have a significant effect on our financial
statements.

3. Earnings Per Share

Basic earnings per share (EPS) is computed by dividing net income by the weighted-average
number of common shares outstanding during the year. Diluted EPS is computed by dividing net
income by the weighted-average number of common shares and dilutive common shares outstanding,
which includes stock options, during the year. A reconciliation of the basic average common shares
outstanding to diluted average common shares outstanding as of June 30 is as follows (in thousands,
except per share data):

2007

2006

2005

Net income

$

240,768

$

236,091

$

150,116

Basic average common shares outstanding

183,961

185,521

188,646

Effect of dilutive stock options

1,604

1,895

1,926

Diluted average common shares outstanding

185,565

187,416

190,572

Earnings per share:

Basic

$

1.31

$

1.27

$

0.80

Diluted

$

1.30

$

1.26

$

0.79

Excluded from the computations above were anti-dilutive shares of 1.9 million, 4.0 million and
2.4 million in fiscal 2007, 2006 and 2005, respectively.

4. Acquisition

On August 9, 2006, we completed the acquisition of Woodhead Industries, Inc. (Woodhead) in an
all cash transaction valued at approximately $238.1 million, including the assumption of debt and
net of cash acquired. Woodhead develops, manufactures and markets network and electrical
infrastructure components engineered for performance in harsh, demanding, and hazardous industrial
environments. The acquisition is a significant step in our strategy to expand our products and
capabilities in the global industrial market.

The following table summarizes the estimated fair values of the assets acquired and
liabilities assumed at the date of acquisition. Goodwill is non-deductible for tax purposes.

The following table illustrates the pro forma effect on operating results for the year ended
June 30, 2006, as if we had acquired Woodhead as of the beginning of the year (the pro forma effect
on the year ended June 30, 2007 was not material) (in thousands, except per share data):

Net revenue

$

3,084,000

Income from operations

325,000

Net income

246,000

Net income per common share  basic

1.33

Net income per common share  diluted

1.31

The above unaudited pro forma financial information is presented for informational
purposes only and does not purport to represent what our results of operations would have been had
we acquired Woodhead on the dates assumed, nor is it necessarily indicative of the results that may
be expected in future periods. Pro forma adjustments exclude cost savings from any synergies
resulting from the combination of Molex and Woodhead.

5. Restructuring and asset impairments

Molex Restructuring Plans

A summary of the restructuring charges and related impairments for the fiscal years ended
June 30 is summarized as follows:

2007

2006

2005

Americas Region:

Severance costs

$

6,945

$

12,436

$

9,141

Asset impairments

4,811

498

7,238

Other

1,500





Total

$

13,256

$

12,934

$

16,379

European Region:

Severance costs

$

12,037

$

6,867

$

3,636

Asset impairments

3,856

1,460

7,205

Total

$

15,893

$

8,327

$

10,841

Corporate and other:

Severance costs

$

7,720

$

4,181

$

2,948

Asset impairments



912



Total

$

7,720

$

5,093

$

2,948

Total:

Severance costs

$

26,702

$

23,484

$

15,725

Asset impairments

8,667

2,870

14,443

Other

1,500





Total

$

36,869

$

26,354

$

30,168

During fiscal 2007, we undertook a restructuring plan designed to reduce costs and to improve
return on invested capital in connection with a new global organization that was effective July 1,
2007. A majority of the plan relates to facilities located in the Americas and European regions,
and, in general, the movement of manufacturing activities at these plants to other facilities. We
expect to incur restructuring and asset impairment costs related to these actions ranging $100 -
$125 million, of which the impact on each region will be determined as the actions become more
certain.

During fiscal 2007, management and the Board of Directors approved several actions related to
this plan. A portion of this plan involves cost savings or other actions that do not result in
incremental expense, such as better utilization of assets, reduced spending and organizational
efficiencies. This plan includes headcount reduction targets throughout the company, and we expect
to achieve these targets through ongoing employee attrition and terminations as detailed below.

During fiscal 2007, we incurred restructuring charges related to employee severance and
benefit arrangements for approximately 335 employees. A substantial majority of these employee
terminations occurred within our Ireland manufacturing operations and various administrative
functions in the Americas and European regions. In addition, we have vacated or plan to vacate
several buildings and are holding these buildings and related assets for sale. This plan resulted
in an impairment charge of $8.7 million to write-down to fair value less the cost to sell the land,
building and equipment asset groupings. The fair value of the asset groupings was determined using
various valuation techniques.

During fiscal 2005, we decided to close certain operations in the Americas and European
regions in order to reduce operating costs and better align our manufacturing capacity with
customer needs. In the Americas region, we closed an industrial manufacturing facility in New
England and have ceased manufacturing in our Detroit area automotive facility. In Europe, we closed
certain manufacturing facilities in Ireland and Portugal and reduced the size of a development
center in Germany. We also closed a manufacturing facility in Slovakia. Production from these
manufacturing facilities was transferred to existing plants within the region. We also took
actions that reduced our selling, general and administrative costs in the Americas and European
regions and at the corporate office. We reduced headcount by approximately 500 people after
additions at the facilities where production was transferred. These actions were substantially
complete as of June 30, 2006.

Woodhead Restructuring Plan

During fiscal 2007, management finalized plans to restructure certain operations of Woodhead
to eliminate redundant costs resulting from the acquisition of Woodhead and improve efficiencies in
operations. The restructuring charges recorded are based on restructuring plans that have been
committed to by management.

The total estimated restructuring costs associated with Woodhead are $4.0 million, consisting
primarily of severance costs. These costs were recognized as a liability assumed in the purchase
business combination and included in the allocation of the cost to acquire Woodhead and,
accordingly, have resulted in an increase to goodwill (see Note 4). Our restructuring expenses may
change as management executes the approved plan. Future decreases to the estimates of executing the
Woodhead restructuring plan will be recorded as an adjustment to goodwill indefinitely, whereas
future increases to the estimates will be recorded as operating expenses.

Changes in the accrued severance balance are summarized as follows (in thousands):

Inventories, less allowances of $42.7 million at June 30, 2007 and $33.9 million at June 30,
2006, consisted of the following (in thousands):

2007

2006

Raw materials

$

85,320

$

62,288

Work in progress

107,394

107,533

Finished goods

199,966

177,491

Total inventories

$

392,680

$

347,312

7. Property, Plant and Equipment

At June 30, property, plant and equipment consisted of the following (in thousands):

2007

2006

Land and improvements

$

67,943

$

63,409

Buildings and leasehold improvements

614,466

549,997

Machinery and equipment

1,502,406

1,418,956

Molds and dies

668,452

632,573

Construction in progress

92,157

97,325

Total

2,945,424

2,762,260

Accumulated depreciation

(1,824,055

)

(1,736,408

)

Net property, plant and equipment

$

1,121,369

$

1,025,852

Depreciation expense for property, plant and equipment was $232.8 million, $212.1 million and
$227.7 million in fiscal 2007, 2006 and 2005, respectively.

8. Goodwill

At June 30, changes to goodwill were as follows (in thousands):

2007

2006

2005

Beginning balance

$

149,458

$

143,872

$

164,915

Impairments





(22,876

)

Additions

183,677

5,591

1,800

Other adjustments

1,656

(5

)

33

Ending balance

$

334,791

$

149,458

$

143,872

On August 9, 2006, we completed the acquisition of Woodhead in an all cash transaction valued
at approximately $238.1 million, including the assumption of debt and net of cash acquired. See
Note 4 for a summary of the estimated fair values of the assets acquired and liabilities assumed at
the date of acquisition.

During the fiscal 2005 annual impairment review for goodwill, indicators of impairment were
found in the Molex Premise Network (MPN) reporting unit. The MPN business, consisting of products
primarily sold into the structured cabling market for data communications, had not performed as
management had expected. Slower growth in MPNs markets served and slower-than-expected customer
acceptance of its products in the structured cabling business, as well as a delay in the transition
to next-generation data
communication networks, had a negative impact on MPNs operating results. These factors
resulted in lower growth expectations for the reporting unit, which resulted in the goodwill
impairment charge.

Based on our assessment of MPNs implied fair value, including a valuation by an independent
valuation firm, we recorded a non-cash impairment charge of $22.9 million in fiscal 2005. The
charge is included as a component of net income in the Corporate and other segment in Note 17.

9. Investments

At June 30, 2007, we owned approximately 20% of an affiliate accounted for under the equity
method. At June 30, 2007, the net book value of this investment was $54.6 million and the market
value based on quoted market prices was $115 million.

10. Income Taxes

Income before income taxes and minority interest for the years ended June 30, is summarized as
follows (in thousands):

2007

2006

2005

United States

$

86,229

$

57,177

$

22,507

International

252,028

270,707

200,694

Income before income taxes

$

338,257

$

327,884

$

223,201

The components of income tax expense (benefit) for the years ended June 30, were as follows
(in thousands):

2007

2006

2005

Current:

U.S. Federal

$

5,406

$

8,204

$

2,583

State

318

1,649

(146

)

International

70,767

90,441

62,957

Total currently payable

$

76,491

$

100,294

$

65,394

Deferred:

U.S. Federal

$

12,579

$

296

$

925

State

370

(289

)

(187

)

International

8,049

(8,508

)

6,953

Total deferred

20,998

(8,501

)

7,691

Total income tax expense

$

97,489

$

91,793

$

73,085

Our effective tax rate differs from the U.S. federal income tax rate for the years ended June
30, as follows:

2007

2006

2005

U.S. Federal income tax rate

35.0

%

35.0

%

35.0

%

Permanent tax exemptions

(1.6

)

(2.6

)

(3.5

)

Repatriation of foreign earnings

(4.5

)

(4.3

)

(4.0

)

Tax examinations and settlements

(1.4

)

(0.9

)

(1.1

)

Goodwill impairment





3.6

Valuation allowance

0.4

1.6

3.1

Investments



(0.8

)



State income taxes, net of Federal tax benefit

0.4

0.4

(0.1

)

Foreign tax rates greater than U.S. Federal rate (net)

(0.8

)

(0.8

)

(1.2

)

Other

1.3

0.4

0.9

Effective tax rate

28.8

%

28.0

%

32.7

%

At June 30, 2007, we had approximately $110.0 million of non-U.S. net operating loss
carryforwards and $3.4 million of U.S. capital loss carryforwards. The capital loss carryforwards
can be carried forward to

offset future U.S. capital gains through fiscal year June 30, 2008.
Substantially all of the non-U.S. net operating losses can be carried forward indefinitely.

Also at June 30, 2007, we had approximately $24.0 million of U.S. foreign tax credit
carryforwards and $2.7 million of U.S. research credit carryforwards. The U.S. foreign tax credit
carryforwards will expire in future years through 2015. The U.S. research credit carryforwards
will expire in future years through 2025.

A valuation allowance is provided when it is more likely than not that some portion of the
deferred tax asset will not be realized. As of June 30, 2007 and 2006, we have recorded valuation
allowances of $39.4 million and $33.9 million, respectively, against the non-U.S. net operating
loss carryforwards.

The components of net deferred tax assets and liabilities as of June 30 are as follows (in
thousands):

2007

2006

Deferred tax assets:

Pension and other postretirement liabilities

$

37,548

$

30,821

Stock option and other benefits

22,619

20,806

Capitalized research and development

20,549

23,740

Foreign tax credits

24,157

31,741

Net operating losses

39,917

33,975

Depreciation and amortization



13,527

Inventory

11,905

11,349

Minimum tax credit

15,414

15,475

Allowance for doubtful accounts

4,648

4,722

Other, net

15,003

15,751

Total deferred tax assets before valuation allowance

191,760

201,907

Valuation allowance

(39,366

)

(33,920

)

Total deferred tax assets

152,394

167,987

Deferred tax liabilities:

Investments

(20,136

)

(18,462

)

Depreciation and amortization

(12,461

)



Total deferred tax liabilities

(32,597

)

(18,462

)

Total net deferred tax assets

$

119,797

$

149,525

The net deferred tax amounts reported in the consolidated balance sheet as of June 30 are as
follows (in thousands):

2007

2006

Net deferred taxes:

Current asset

$

16,171

$

19,054

Non-current asset

103,626

130,471

Total

$

119,797

$

149,525

We have not provided for U.S. deferred income taxes or foreign withholding taxes on
approximately $754.0 million of undistributed earnings of certain of our non-U.S. subsidiaries as
of June 30, 2007. These earnings are intended to be permanently invested. It is not practicable
to estimate the additional income taxes which would be paid if the permanently reinvested earnings
were distributed.

We were granted favorable tax status and other incentives in Singapore and Malaysia, subject
to
certain conditions. The current Singapore grant is effective through March 2015 and the
Malaysia grant is effective through November 2007. We plan to requesting an extension of the
Malaysian grant. We were granted various tax holidays in China, which are effective for various
terms and subject to certain conditions.

The impact of these grants was to decrease local country
taxes by $10.7 million, $8.5 million and $7.8 million in fiscal years 2007, 2006 and 2005,
respectively.

11. Profit Sharing, Pension and Post Retirement Medical Benefit Plans

Profit Sharing Plans

We provide discretionary savings and other defined contribution plans covering substantially
all of our U.S. employees and certain employees in international subsidiaries. Employer
contributions to these plans of $15.4 million, $16.5 million and $14.6 million were charged to
operations during fiscal 2007, 2006 and 2005, respectively.

Pension Plans

We sponsor and/or contribute to pension plans, including defined benefit plans, covering
substantially all U.S. plant hourly employees and certain employees in non-U.S. subsidiaries. The
benefits are primarily based on years of service and the employees compensation for certain
periods during their last years of employment. Non-U.S. plans are primarily in France, Germany,
Ireland, Japan, Korea and Taiwan.

Post Retirement Medical Benefit Plans

We have retiree health care plans that cover the majority of our U.S. employees. Employees
hired before January 1, 1994 may become eligible for these benefits if they reach age 55, with age
plus years of service equal to 70. Employees hired after January 1, 1994 may become eligible for
these benefits if they reach age 60, with age plus years of service equal to 80. The cost of
retiree health care is accrued over the period in which the employees become eligible for such
benefits. We continue to fund benefit costs primarily as claims are paid. There are no
significant postretirement health care benefit plans outside of the U.S.

Benefit Obligation and Plan Assets

The changes in the benefit obligations and plan assets for the plans described above were as
follows:

The amounts recognized in the consolidated balance sheets were as follows (in thousands):

U.S. Pension

Non-U.S. Pension

Postretirement

Benefits

Benefits

Medical Benefits

2007

2006

2007

2006

2007

2006

Prepaid expenses

$

595

$

3,244

$

8,110

$

6,230

$



$



Accrued pension and other
post retirement benefits

(3,686

)



(54,251

)

(45,661

)

(50,756

)

(29,394

)

Accumulated other comprehensive
income

4,333



12,328



16,850



Net amount recognized

$

1,242

$

3,244

$

(33,813

)

$

(39,431

)

$

(33,906

)

$

(29,394

)

The amounts recorded to accumulated other comprehensive income before taxes, as of June
30, 2007, were as follows (in thousands):

Non-U.S.

Postretirement

U.S. Pension

Pension

Medical

Benefits

Benefits

Benefits

Net transition liability

$



$

250

$



Net actuarial loss

4,308

9,309

23,572

Net prior service costs

25

2,769

(6,722

)

Defined benefit plans, net

$

4,333

$

12,328

$

16,850

The funding status as of June 30, 2006, was as follows (in thousands):

Non-U.S.

Postretirement

U.S. Pension

Pension

Medical

Benefits

Benefits

Benefits

Ending Funded Status

$

2,147

$

(51,610

)

$

42,190

Unrecognized net transition liability



293



Unrecognized actuarial loss

1,068

11,886

(20,193

)

Unrecognized prior service costs

29



7,397

Net amount recognized

$

3,244

$

(39,431

)

$

29,394

The accumulated benefit obligations as of June 30, 2006, were as follows (in thousands):

Non-U.S.

Postretirement

U.S. Pension

Pension

Medical

Benefits

Benefits

Benefits

Accumulated benefit obligation

$

33,127

$

73,522

$

42,190

The amounts applicable to our pension plans with accumulated benefit obligations in
excess of plan assets, as well as projected benefit obligations in excess of plan assets are as
follows (in thousands):

Weighted average actuarial assumptions used to determine benefit obligations for the plans
were as follows:

Postretirement

U.S. Pension Benefits

Non-U.S. Pension Benefits

Medical Benefits

2007

2006

2007

2006

2007

2006

Discount rate

6.2

%

6.4

%

3.8

%

3.9

%

6.2

%

6.3

%

Rate of compensation increase

3.7

%

3.5

%

3.5

%

3.4

%





Health care cost trend









10.0

%

10.0

%

Ultimate health care cost trend









5.0

%

5.0

%

Years of ultimate rate









2012

2011

For the postretirement medical benefit plan, a one-percentage point change in the assumed
health care cost trend rates would have the following effect (in thousands):

2007

2006

2005

Effect on total service and interest cost:

Increase 100 basis points

$

1,287

$

1,476

$

1,073

Decrease 100 basis points

(1,014

)

(1,211

)

(908

)

Effect on benefit obligation:

Increase 100 basis points

$

9,057

$

9,951

$

8,655

Decrease 100 basis points

(7,270

)

(8,164

)

(7,325

)

Weighted-average actuarial assumptions used to determine costs for the plans were as follows
(in thousands):

Postretirement

U.S. Pension Benefits

Non-U.S. Pension Benefits

Medical Benefits

2007

2006

2007

2006

2007

2006

Discount rate

6.3

%

5.5

%

3.9

%

3.4

%

6.3

%

5.5

%

Expected return on plan assets

8.4

%

8.5

%

6.5

%

5.9

%





Rate of compensation increase

3.7

%

3.5

%

3.4

%

3.0

%





Health care cost trend









10.0

%

10.0

%

Ultimate health care cost trend









5.0

%

5.0

%

Years of ultimate rate









2011

2010

The discount rate is determined based on high-quality fixed income investments that match
the duration of expected benefit payments. Generally, we used the corporate AA/Aa bond rate for
this assumption. The expected return on plan assets noted above represents a forward projection of
the average rate of earnings expected on the pension assets. We estimated this rate based on
historical returns of similarly diversified portfolios. The rate of compensation increase
represents the long-term assumption for expected increases to salaries for pay-related plans.

Net Periodic Benefit Cost

The components of net periodic benefit cost for our plans consist of the following for the
years ended June 30 (in thousands):

The amount in accumulated other comprehensive income that is expected to be recognized as
a component of net periodic benefit cost in fiscal 2008 is $1.2 million.

Plan Assets

Our overall investment strategy for the assets in the pension funds is to achieve a balance
between the goals of growing plan assets and keeping risks at a reasonable level over a long-term
investment horizon. In order to reduce unnecessary risk, the pension funds are diversified across
several asset classes with a focus on total return. The weighted-average asset allocations for our
pension plans at June 30 are as follows (in thousands):

2007

2006

Non-U.S.

Non-U.S.

U.S. Plan

Plan

Plan

Assets

Assets

Assets

Assets

Asset category:

Equity

68

%

70

%

65

%

71

%

Bonds

32

%

21

%

30

%

20

%

Other



9

%

5

%

9

%

Adoption of SFAS No. 158

Effective for fiscal 2007, we adopted the provisions of SFAS No. 158 Employers accounting
for defined benefit pension and other postretirement plans. SFAS No. 158 requires that the funded
status of defined-benefit postretirement plans be recognized on the consolidated balance sheet, and
changes in the funded status be reflected in comprehensive income. SFAS No. 158 also requires the
measurement date of the plans funded status to be the same as our fiscal year-end in fiscal 2008.
For fiscal 2007, we maintained the measurement date for the U.S. plans in March, and the
measurement date for the non-U.S. plans was June prior to adoption of SFAS No. 158. The incremental
effect of applying SFAS No. 158 on individual line items on the consolidated balance sheet as of
June 30, 2007 was as follows:

Before

After

Application of

Application of

SFAS No. 158

Adjustments

SFAS No. 158

Non-current deferred income taxes

$

1,545

$

10,866

$

12,411

Other assets

15,205

(6,500

)

8,705

Other non-current liabilities

86,362

22,331

108,693

Accumulated other comprehensive income (loss)

159,363

(17,965

)

141,398

Funding Expectations

No contributions are required during 2008 under applicable law for the U.S. Pension Plan. We
intend to make a voluntary contribution so that assets are not less than the accumulated benefit
obligation at
the end of the fiscal year. Expected funding for the non-U.S. plans during fiscal 2008 is
approximately $10.7 million. Employer contributions to the postretirement medical benefits plan are
expected to be approximately $1.5 million in fiscal 2008.

The total benefits to be paid from the U.S. and non-U.S. pension plans and other
postretirement benefit plans are not expected to exceed $15 million in any year through 2017.

12. Debt

We had available lines of credit totaling $181.6 million at June 30, 2007, expiring between
2008 and 2012. Our long-term debt approximates $128.7 million at June 30, 2007. In order to fund
the cash portion of our investment in Woodhead made during fiscal 2007, we entered into two term
notes aggregating 15 billion Japanese yen ($121.8 million) and borrowed $44.0 million on our
unsecured revolving credit line. The term note agreements have three-year terms with
weighted-average fixed interest rates approximating 1.3%. The $44.0 million that we borrowed on our
unsecured revolving line of credit was repaid during the second quarter of fiscal 2007. Principal
payments on long-term debt obligations, including interest, are due
as follows: fiscal 2008, $1.3
million; fiscal 2009, $1.0 million; fiscal 2010,
$122.9 million; fiscal 2011, $3.3 million; fiscal 2012,
$0.4 million; and
thereafter, $0.2 million.

In addition to the two term notes above, our remaining long-term debt generally consists of
mortgages and industrial development bonds with interest rates ranging from 3.8% to 7.8% and
maturing through 2012. Certain assets, including land, buildings and equipment, secure our
long-term debt.

13. Leases

We rent certain facilities and equipment under operating lease arrangements. Some of the
leases have renewal options. Future minimum lease payments are presented below (in thousands):

Operating

Year ending June 30:

Leases

2008

$

13,870

2009

5,669

2010

3,947

2011

2,836

2012

3,136

2013 and thereafter

6,556

Total lease payments

$

36,014

Rental expense was $10.4 million, $10.2 million and $9.3 million in fiscal 2007, 2006 and
2005, respectively.

14. Capital Stock

The shares of Common Stock, Class A Common Stock and Class B Common Stock are identical except
as to voting rights. Class A Common Stock has no voting rights except in limited circumstances.
So long as more than 50% of the authorized number of shares of Class B Common Stock continues to be
outstanding, all matters submitted to a vote of the stockholders, other than the election of
directors, must be approved by a majority of the Class B Common Stock, voting as a class, and by a
majority of the Common Stock, voting as a class. During such period, holders of a majority of the
Class B Common Stock could veto corporate action, other than the election of directors, which
requires stockholder approval. There are
25 million shares of preferred stock authorized, none of which were issued or outstanding
during the three years ended June 30, 2007.

The Class B Common Stock can be converted into Common Stock on a share-for-share basis at any
time at the option of the holder. The authorized Class A Common Stock would automatically convert
into Common Stock on a share-for-share basis at the discretion of the Board of Directors upon the
occurrence of certain events. Upon such conversion, the voting interests of the holders of Common
Stock and Class B

Common Stock would be diluted. Our Class B Common Stock outstanding has remained
at 94,255 shares during the three years ended June 30, 2007.

The holders of the Common Stock, Class A Common Stock and Class B Common Stock participate
equally, share-for-share, in any dividends that may be paid thereon if, as and when declared by the
Board of Directors or in any assets available upon our liquidation or dissolution.

Changes in common stock for the years ended June 30 are as follows (in thousands):

Class A

Common Stock

Common Stock

Treasury Stock

Shares

Amount

Shares

Amount

Shares

Amount

Outstanding at June 30, 2004

110,415

$

5,521

104,162

$

5,208

25,601

$

509,161

Exercise of stock options

399

20

836

42

64

1,685

Purchase of treasury stock









2,395

58,217

Issuance of stock awards









(25

)

(553

)

Other









14

407

Outstanding at June 30, 2005

110,814

$

5,541

104,998

$

5,250

28,049

$

568,917

Exercise of stock options

483

24

1,584

79

309

8,736

Purchase of treasury stock









6,018

165,323

Issuance of stock awards





16

1





Other









8

243

Outstanding at June 30, 2006

111,297

$

5,565

106,598

$

5,330

34,384

$

743,219

Exercise of stock options

426

21

1,890

95

705

21,801

Purchase of treasury stock









1,248

34,889

Issuance of stock awards





25

1





Other

7

1

49

2



(15

)

Outstanding at June 30, 2007

111,730

$

5,587

108,562

$

5,428

36,337

$

799,894

15. Accumulated Other Comprehensive Income

The components of accumulated other comprehensive income are as follows (in thousands):

2007

2006

Foreign currency translation adjustments

$

157,002

$

105,993

Non-current deferred tax asset

12,411



Accumulated transition obligation

(250

)



Accumulated prior service credit

3,928



Accumulated net loss

(37,189

)



Unrealized gains on investments

5,496

720

Total

$

141,398

$

106,713

16. Stock Incentive Plans

Share-based compensation is comprised of expense related to stock options and stock awards.
Share-based compensation cost recognized in selling, general and administrative expense for fiscal
2007 was $27.5 million and the related tax benefit was $9.6 million.

Stock options that we grant to employees who are not executive officers (non-officer
employees) are options to purchase Class A Common Stock at an exercise price that is generally 50%
of the fair market value of the stock on the grant date. These grants generally vest 25% per year
beginning the first anniversary date of the grant. Stock options to U.S.-based non-officer
employees are automatically exercised on the vesting date. The number of shares authorized for
employee stock option grants is 12.5 million.

The stock options that are approved for grant to executive officers and directors are
generally options to purchase Class A Common Stock at an exercise price that is 100% of the fair
market value of the stock on the grant date. These grants generally vest 25% per year beginning the
first anniversary date of the award with a term of five years. The number of shares authorized for
stock option grants to executive officers and directors is 12.5 million.

At June 30, 2007, exercisable options had an aggregate intrinsic value of $14.8 million with a
weighted-average remaining contractual life of 2.2 years. In addition, there were 5.8 million
options expected to vest, after consideration of expected forfeitures, with an aggregate intrinsic
value of $46.9. Total options outstanding had an aggregate intrinsic value of $65.7 million with a
weighted-average remaining contractual life of 3.2 years. The total intrinsic value of options
exercised during fiscal 2007, 2006 and 2005 was $10.6 million, $28.0 million and $14.2 million,
respectively.

We use the Black-Scholes option-pricing model to estimate the fair value of each option grant
as of the date of grant. Expected volatilities are based on historical volatility of Common Stock.
We estimate the expected life of the option using historical data pertaining to option exercises
and employee terminations. Separate groups of employees that have similar historical exercise
behavior are considered separately for estimating the expected life. The risk-free interest rate is
based on U.S. Treasury yields in effect at the time of
grant. The estimated weighted-average fair values of and related assumptions for options
granted were as follows:

As of June 30, 2007, there were options outstanding to purchase 0.8 million shares of Common
Stock and 9.4 million shares of Class A Common Stock.

Stock Awards

Stock awards are generally comprised of stock units that are convertible into shares of Class
A Common Stock. Generally, these grants vest 25% per year beginning the first anniversary date of
the award. Stock awards transactions are summarized as follows (shares in thousands):

Fair Market

Shares

Value

Nonvested shares at June 30, 2004

409

$

24.33

Granted

188

24.49

Vested

(151

)

25.32

Nonvested shares at June 30, 2005

446

$

24.06

Granted

249

24.56

Vested

(195

)

20.43

Nonvested shares at June 30, 2006

500

$

24.33

Granted

271

29.51

Vested

(168

)

23.57

Forfeited

(62

)

25.05

Nonvested shares at June 30, 2007

541

$

27.08

As of June 30, 2007, there was $12.2 million of total unrecognized compensation cost related
to the above nonvested stock bonus awards. We expect to recognize the cost of these stock awards
over a weighted-average period of 2.7 years. The total fair value of shares vested during fiscal
2007, 2006, and 2005 was $4.7 million, $4.0 million and $3.8 million, respectively.

Directors Deferred Compensation Plan

Our non-employee directors are eligible to participate in a deferred compensation plan under
which they may elect on a yearly basis to defer all or a portion of the following years
compensation. A participant may elect to have the deferred amount (a) accrue interest during each
calendar quarter at a rate equal to the average six month Treasury Bill rate in effect at the
beginning of each calendar quarter, or (b) credited as stock units whereby each unit is equal to
one share of Common Stock. The cumulative amount that is deferred for each participating director
is subject to the claims of our general creditors.

If a non-employee director elects to have his or her compensation deferred as stock units, the
compensation earned for a given quarter is converted to stock units at the closing price of common
stock on the date the compensation would otherwise be paid. Stock units are distributed in shares
of common stock.

17. Segment and Related Information

We operated in one product segment: the manufacture and sale of electronic components. Revenue
is recognized based on the location of the selling entity. Management operated the business
through four regions. The Americas region consisted primarily of operations in the U.S., Mexico
and Brazil. The Asia Pacific North region includeed Japan and Thailand and two manufacturing
operations in northern China. The Asia Pacific South region included the rest of China, Korea,
Singapore and the remaining countries in Asia. European operations are located in both Eastern and
Western Europe. Corporate and other included

The following is a condensed summary of our unaudited quarterly results of operations and
quarterly earnings per share data for fiscal 2006 (in thousands, except per share data):

First

Second

Third

Fourth

Quarter

Quarter

Quarter

Quarter

Net revenue

$

659,815

$

697,348

$

720,327

$

783,799

Gross profit

213,819

227,796

242,398

258,617

Income before income taxes

64,663

81,389

85,572

96,260

Income taxes

18,423

23,193

24,388

25,789

Net income

46,240

58,196

61,184

70,471

Basic earnings per share

0.25

0.31

0.33

0.38

Diluted earnings per share

0.25

0.31

0.33

0.38

During the fourth quarter of fiscal 2007, income from operations was impacted by a pre-tax
charge of $36.9 million relating to restructuring costs and asset impairments (see Note 5). These
charges reduced net income by $30.3 million, or $0.16 per share.

In each quarter of fiscal 2006, we recognized expense related to the fiscal 2005 restructuring
program ranging from $4.3 million to $10.7 million.

We have audited the accompanying consolidated balance sheets of Molex Incorporated as of June
30, 2007 and 2006, and the related consolidated statements of income, stockholders equity, and
cash flows for each of the three years in the period ended June 30, 2007. Our audits also included
the financial statement schedule listed in the Index of Part IV, Item 15. These financial
statements and schedule are the responsibility of the Companys management. Our responsibility is
to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all
material respects, the consolidated financial position of Molex Incorporated at June 30, 2007 and
2006, and the consolidated results of its operations and its cash flows for each of the three years
in the period ended June 30, 2007, in conformity with U.S. generally accepted accounting
principles. Also, in our opinion, the related financial statement schedule, when considered in
relation to the basic financial statements taken as a whole, presents fairly in all material
respects the information set forth therein.

As discussed in Note 11 to the consolidated financial statements, the Company adopted the
recognition and disclosure provisions of Statement of Financial Accounting No. 158, Employers
Accounting for Defined Benefit Pension and Other Postretirement Plans, as of June 30, 2007.

We also have audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the effectiveness of Molex Incorporateds internal control over
financial reporting as of June 30, 2007, based on criteria established in Internal
ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission and our report dated August 1, 2007 expressed an unqualified opinion thereon.

We have audited managements assessment, included in the accompanying Managements Report on
Internal Control Over Financial Reporting, that Molex Incorporated maintained effective internal
control over financial reporting as of June 30, 2007, based on criteria established in Internal
ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (the COSO criteria). Molex Incorporateds management is responsible for maintaining
effective internal control over financial reporting and for its assessment of the effectiveness of
internal control over financial reporting. Our responsibility is to express an opinion on
managements assessment and an opinion on the effectiveness of the companys internal control over
financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects. Our audit included obtaining an understanding of internal
control over financial reporting, evaluating managements assessment, testing and evaluating the
design and operating effectiveness of internal control, and performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides a reasonable basis
for our opinion.

A companys internal control over financial reporting is a process designed to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting
principles. A companys internal control over financial reporting includes those policies and
procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately
and fairly reflect the transactions and dispositions of the assets of the company; (2) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and
directors of the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the companys assets that could have
a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent
or detect misstatements. Also, projections of any evaluation of effectiveness to future periods
are subject to the risk that controls may become inadequate because of changes in conditions, or
that the degree of compliance with the policies or procedures may deteriorate.

As indicated in the accompanying Managements Report on Internal Control Over Financial
Reporting, managements assessment of and conclusion on the effectiveness of internal control over
financial reporting did not include the internal controls of Woodhead Industries, Inc., which is
included in the fiscal year 2007 consolidated financial statements of Molex Incorporated and
constituted 11% and 12% of total and net assets, respectively, as of
June, 30, 2007 and 6% and 4%
of revenues and net income, respectively, for the year then ended. Our audit of internal control
over financial reporting of Molex Incorporated also did not include an evaluation of the internal
control over financial reporting of Woodhead Industries, Inc.

In our opinion, managements assessment that Molex Incorporated maintained effective internal
control over financial reporting as of June 30, 2007, is fairly stated, in all material respects,
based on the COSO criteria. Also, in our opinion, Molex Incorporated maintained, in all material
respects, effective internal control over financial reporting as of June 30, 2007, based on the
COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the fiscal year 2007 consolidated financial statements of Molex
Incorporated and our report dated August 1, 2007, expressed an unqualified opinion thereon.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None

Item 9A. Controls and Procedures

Attached as exhibits to this Form 10-K are certifications of our Chief Executive Officer
(CEO) and Chief Financial Officer (CFO), which are required in accordance with Rule 13a-14 under
the Securities Exchange Act of 1934, as amended (the Exchange Act). This Controls and Procedures
section includes information concerning the controls and controls evaluation referred to in the
certifications. Immediately preceding Part II, Item 9 of this Form 10-K is the report of Ernst &
Young LLP, our independent registered public accounting firm, regarding its audit of our internal
control over financial reporting and of managements assessment of internal control over financial
reporting set forth below in this section. This section should be read in conjunction with the
certifications and the Ernst & Young report for a more complete understanding of the topics
presented.

Evaluation of Disclosure Controls and Procedures

Management conducted an evaluation of the effectiveness of the design and operation of our
disclosure controls and procedures (Disclosure Controls) as of the end of the period covered by
this Form 10-K. The controls evaluation was conducted under the supervision and with the
participation of management, including our CEO and CFO. Disclosure Controls are controls and
procedures designed to reasonably assure that information required to be disclosed in our reports
filed under the Exchange Act, such as this Form 10-K, is recorded, processed, summarized and
reported within the time periods specified in the SECs rules and forms. Disclosure Controls are
also designed to reasonably assure that such information is accumulated and communicated to
management, including the CEO and CFO, as appropriate to allow timely decisions regarding required
disclosure. Our quarterly evaluation of Disclosure Controls includes an evaluation of some
components of our internal control over financial reporting, and internal control over financial
reporting is also separately evaluated on an annual basis for purposes of providing the management
report, which is set forth below.

The evaluation of our Disclosure Controls included a review of the controls objectives and
design, our implementation of the controls and the effect of the controls on the information
generated for use in this Form 10-K. In the course of the controls evaluation, management reviews
identified data errors, control problems or acts of fraud, if any, and seeks to confirm that
appropriate corrective actions, including process improvements, were being undertaken. This type
of evaluation is performed on a quarterly basis so that the conclusions of management, including
the CEO and CFO, concerning the effectiveness of the Disclosure Controls can be reported in our
periodic reports on Form 10-Q and Form 10-K. Many of the components of our Disclosure Controls are
also evaluated on an ongoing basis by our Internal Audit Department and by other personnel in the
Finance organization. The overall goals of these various evaluation activities are to monitor our
Disclosure Controls, and to modify them as necessary. Our intent is to maintain the Disclosure
Controls as dynamic systems that change as conditions warrant.

Based upon the controls evaluation, our CEO and CFO have concluded that, as of the end of the
period covered by this report, our Disclosure Controls were effective to provide reasonable
assurance that information required to be disclosed in our Exchange Act reports is recorded,
processed, summarized and reported within the time periods specified by the SEC, and that material
information relating to us and our consolidated subsidiaries is made known to management, including
the CEO and CFO, during the period when our periodic reports are being prepared.

Managements Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining an adequate system of internal
control over financial reporting as required by the Sarbanes-Oxley Act of 2002 and as defined in
Exchange

Act Rule 13a-15(f). A control system can provide only reasonable, not absolute, assurance
that the objectives of the control system are met.

Our management assessed the effectiveness of our internal control over financial reporting as
of June 30, 2007. As discussed in Item 1 of this annual report under Business and in Note 4 to our
consolidated financial statements included in this annual report, we completed the acquisition of
Woodhead Industries, Inc. (Woodhead) on August 10, 2006. As permitted by the rules and regulations
of the SEC, we excluded Woodhead from our assessment of our internal control over financial
reporting as of June 30, 2007. The total assets and revenues of Woodhead included in our
consolidated financial statement were approximately 11% and 6%, respectively, as of and for the
year ended June 30, 2007.

Under managements supervision, an evaluation of the design and effectiveness of our internal
control over financial reporting was conducted based on the framework in Internal
ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO). Based on this evaluation, management concluded that our internal control over
financial reporting was effective as of June 30, 2007.

Ernst & Young LLP, an independent registered public accounting firm, as auditors of Molex
Incorporateds financial statements, issued an attestation report on managements assessment of the
effectiveness of our internal control over financial reporting as of June 30, 2007. Ernst & Young
LLPs report, which expresses unqualified opinions on managements assessment and on the
effectiveness of our internal control over financial reporting, is included herein.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during
our most recently completed fiscal quarter that have materially affected, or are reasonably likely
to materially affect, our internal control over financial reporting. As permitted by the rules and
regulations of the SEC, we excluded Woodhead from our assessment of our internal control over
financial reporting for the quarter ended June 30, 2007. We are in the process of integrating the
internal control procedures of Woodhead into our internal control structure.

Inherent Limitations on Effectiveness of Controls

Our management, including the CEO and CFO, do not expect that our Disclosure Controls or our
internal control over financial reporting will prevent or detect all error and all fraud. A
control system, no matter how well designed and operated, can provide only reasonable, not
absolute, assurance that the control systems objectives will be met. The design of a control
system must reflect the fact that there are resource constraints, and the benefits of controls must
be considered relative to their costs. Further, because of the inherent limitations in all control
systems, no evaluation of controls can provide absolute assurance that misstatements due to error
or fraud will not occur or that all control issues and instances of fraud, if any, within the
Company have been detected. These inherent limitations include the realities that judgments in
decision-making can be faulty and that breakdowns can occur because of simple error or mistake.
Controls can also be circumvented by the individual acts of some persons, by collusion of two or
more people, or by management override of the controls. The design of any system of controls is
based in part on certain assumptions about the likelihood of future events, and there can be no
assurance that any design will succeed in achieving its stated goals under all potential future
conditions. Projections of any evaluation of controls effectiveness to future periods are subject
to risks. Over time, controls may become inadequate because of changes in conditions or
deterioration in the degree of compliance with policies or procedures.

The information under the captions Item 1  Election of Directors, Board Independence
Board and Committee Information, Corporate Governance, and Section 16(a) Beneficial Ownership
Reporting Compliance in our Proxy Statement for the Annual Meeting of Stockholders to be held on
October 26, 2007 is incorporated herein by reference. The information called for by Item 401 of
Regulation S-K relating to the Executive Officers is furnished in Part I, Item 1 of this Form 10-K
and is also incorporated by reference in this section.

Item 11. Executive Compensation

The information under the caption Executive Compensation in our 2007 Proxy Statement is
incorporated herein by reference.

The information under the captions Security Ownership of Directors and Executive
Officers, Security Ownership of More than 5% Shareholders and Equity Compensation Plan
Information in our 2007 Proxy Statement is incorporated herein by reference.

Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the
Company has duly caused this Annual Report to be signed on its behalf by the undersigned, there
unto duly authorized.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the capacities and on the
dates indicated.